13:43 PM | March 3, 2020 | Mark Thomas
McDermott International will move forward with the $2.725-billion sale of its Lummus Technology subsidiary to a joint partnership of The Chatterjee Group (TCG; New York) and Rhône Capital (New York and London) after failing to attract a better alternative bid.
“McDermott did not receive a higher or better bid during the solicitation period, and the auction previously scheduled for Monday, 9 March 2020, will not occur,” says McDermott. A hearing to confirm the sale to the partnership will be held on 12 March, it says.
Under the agreement, announced in January, subsidiaries of McDermott entered into a share and asset purchase agreement to sell Lummus Technology to the partnership as the “stalking horse bidder” for the base purchase price of $2.725 billion, subject to the company receiving higher or otherwise better bids through the auction process.
McDermott will have the option to retain or purchase, as applicable, a 10% common equity ownership interest in the entity established by the partnership purchasing Lummus Technology.
Proceeds from the sale are expected to repay McDermott’s debtor-in-possession financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity, according to the company. The sale is part of McDermott’s Chapter 11 bankruptcy process, in which the company is carrying out a $4.6-billion debt-to-equity restructuring.
TCG is a strategic investor with businesses across a wide range of industries. Rhône Group is a private equity firm.