McDermott's $1B Refinancing Restores Bonding Power and Global EPC Growth

HOUSTON, TX – September 21, 2026 – In the complex world of global energy infrastructure, engineering prowess is only as effective as the balance sheet that supports it. McDermott International, Ltd has fundamentally reinforced that support structure, announcing today the successful completion of a comprehensive multi-billion-dollar refinancing transaction. By securing a backstopped $500 million equity financing, a $550 million senior secured Nordic bond issuance, and a sweeping new long-term letter of credit and guarantee facility, the engineering, procurement, and construction (EPC) giant has effectively cleared the runway for its long-term strategic vision.

For an industry that has weathered extreme volatility over the past half-decade, this financial restructuring is more than a balance sheet exercise; it is a critical restoration of operational capacity. The refinancing provides McDermott with the necessary liquidity and maturity extensions to execute its massive global backlog, signaling a renewed era of stability for one of the energy sector's premier infrastructure builders.

"This refinancing reflects the continued support and confidence our shareholders, lenders and bond investors have shown in our strategy, performance and future," Michael McKelvy, McDermott Chief Executive Officer and Chair of the Board of Directors, stated in the company's release. "We believe the successful completion of this transaction positions McDermott with the financial foundation to continue building on the momentum we've established through strong project delivery and a relentless focus on serving our customers."

A Financial Rebirth Backed by Deep Conviction

The mechanics of this refinancing package reveal a remarkable level of institutional conviction in McDermott's turnaround trajectory. The $500 million equity financing, executed through a rights offering to existing shareholders, was 97% subscribed by Class A ordinary shareholders. The remaining balance was seamlessly fulfilled by related backstop commitments. Market analysts observing the transaction noted that such a high subscription rate—particularly in a heavily discounted offering—demonstrates that core distressed-debt and value-oriented asset managers are deeply committed to preventing dilution and capturing the long-term upside of the company's recovery.

Heavyweight sponsors, including MFN Partners, Mason Capital Management, The Baupost Group, and First Pacific Advisors (FPA), provided the crucial backstop, ensuring the company received the full cash infusion regardless of secondary market participation. This unified front of institutional backing paves a clear trajectory for McDermott, potentially setting the stage for a future US public re-listing once multi-year audited profitability is firmly re-established.

Equally significant is the $550 million senior secured bond issuance. Priced in July and maturing in July 2031, the 5-year paper carries a fixed coupon of 10.50% and is listed on the Euronext Nordic ABM. Tapping the Nordic bond market—a specialized arena known for its deep understanding of maritime assets and offshore energy services—was a highly strategic maneuver. Administered by Nordic Trustee and arranged by institutions like DNB Carnegie and Clarksons Securities, the bond issue circumvents the constraints of the traditional US high-yield syndicated loan market.

Credit rating agencies have responded favorably to the structural protections and collateral backing the new debt. S&P Global Ratings assigned the Nordic notes a 'BB' issue-level rating—two notches above the company's 'B+' Issuer Credit Rating—alongside a '1' recovery rating. This denotes an expectation for a very high default recovery of roughly 95%, supported by McDermott's tangible asset base, which includes proprietary fabrication yards and a diversified fleet of specialty marine construction vessels like the deepwater pipelay vessel Amazon.

The Mechanics of EPC Survival: Why Bonding Power Matters

While the $1.05 billion in fresh capital captures the headlines, the most operationally vital component of this refinancing is the overhaul of McDermott's banking and bonding facilities. In the global EPC industry, contracts are won or lost on performance guarantees. Even the most technically capable firm cannot bid on a multi-billion-dollar mega-project without robust letter of credit (LC) capacity.

Project owners routinely require bid bonds representing 2% to 5% of the contract value, advance payment guarantees (APGs) of 10% to 20%, and performance letters of credit (PLOCs) of 10% to 15% that are retained until the project is fully commissioned. Under its prior capital structure—which was heavily burdened by the fallout of its 2020 Chapter 11 bankruptcy and a complex 2024 UK and Dutch restructuring tied to a legacy arbitration dispute—McDermott faced restrictive covenants. Looming requirements to post up to 105% cash collateral on letters of credit threatened to trap operational liquidity.

The new banking package completely dismantles these cash-collateral traps. The facilities comprise a $1.3 billion syndicated Performance Letter of Credit facility, a $400 million bilateral LC facility, and a $100 million cash flow revolving credit facility due in 2031. By securing $1.7 billion in total LC capacity on commercial, low-margin cash-retention terms, McDermott has restored its commercial bonding power. This reassures Tier-1 energy supermajors that the company can confidently post performance bonds without draining its operational lifeblood.

With pro forma unrestricted cash and equivalents now exceeding $1.2 billion, McDermott has built a formidable operational buffer against supply chain disruptions and working capital swings. Furthermore, the deleveraging effect of retiring legacy funded takeback term debt is projected to lower the company's S&P-adjusted debt-to-EBITDA ratio into the mid-2x range by the end of 2026, a substantial improvement from the roughly 3x leverage seen in 2025.

Strategic Shifts in a Volatile Energy Landscape

This financial stabilization arrives at a critical juncture for the global energy sector. As the world navigates the dual imperatives of energy security and the transition to lower-carbon infrastructure, the demand for sophisticated LNG and offshore engineering has surged. McDermott currently sits on a formidable backlog of $15.8 billion as of mid-2026, supported by anchor relationships with state-owned heavyweights.

Key to this backlog is a fundamental shift in McDermott's contracting strategy. The company's historical struggles were largely tied to massive cost overruns on unlucrative, fixed-price lump-sum turnkey (LSTK) contracts in the US Gulf Coast downstream and LNG sectors. Today, management has enforced rigorous contracting discipline, pivoting aggressively toward cost-reimbursable, hybrid target-price, and progressive lump-sum contracts. This risk-mitigated approach prevents the catastrophic cost overruns that previously forced the company into restructuring.

The fruits of this discipline are evident in ongoing mega-projects. McDermott continues to execute major offshore production platforms and pipeline infrastructure packages for QatarEnergy's massive North Field East (NFE) and North Field South (NFS) LNG expansion projects. In the Middle East, the company remains a preferred contractor for Saudi Aramco, securing multiple offshore package awards under a Long-Term Agreement (LTA) and providing critical Project Management Consultancy (PMC) framework services.

Supported by globally integrated resources—including over 30,000 employees and locally-focused fabrication facilities in Batam, Indonesia; Jebel Ali, UAE; and Dammam, Saudi Arabia—McDermott is uniquely positioned to deliver on these complex international mandates.

The Road to 2031 and Lasting Value

When evaluating McDermott's position against its competitive peer group, the strategic value of this refinancing becomes even clearer. While pure-play subsea contractors like Subsea7 ride the wave of deepwater tie-backs, and integrated technology providers like TechnipFMC focus heavily on modular equipment, McDermott retains a distinct competitive moat as a fully-integrated EPC provider capable of handling massive fabrication and marine installation from concept to commissioning.

The successful closing of this comprehensive transaction effectively closes the book on years of financial uncertainty. By extending its maturity profile to 2031, deleveraging the balance sheet, and securing the bonding capacity necessary to compete for the next generation of global energy infrastructure, McDermott has engineered a masterful turnaround. For an industry that relies on the flawless execution of multi-billion-dollar assets to power the global economy, the return of a financially resilient, disciplined, and fully capitalized McDermott provides a crucial pillar of stability for the years ahead.