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MDR > SEC Filings for MDR > Form 8-K on 16-Apr-2014All Recent SEC Filings

Show all filings for MCDERMOTT INTERNATIONAL INC

Form 8-K for MCDERMOTT INTERNATIONAL INC


16-Apr-2014

Entry into a Material Definitive Agreement, Termination of a Material


Item 1.01 Entry into a Material Definitive Agreement.

The information included in Item 2.03 of this Current Report on Form 8-K (this "Report") is incorporated by reference into this Item 1.01.



Item 1.02 Termination of a Material Definitive Agreement.

The information included in Item 2.03 of this Report is incorporated by reference into this Item 1.02.



Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Purchase Agreement

On April 10, 2014, McDermott International, Inc., a Panamanian corporation ("McDermott"), and certain subsidiary guarantors named therein (the "Guarantors") entered into a Purchase Agreement (the "Purchase Agreement") with Goldman, Sachs & Co., as the representative of the several initial purchasers named on Schedule A thereto (collectively, the "Initial Purchasers"), pursuant to which McDermott agreed to sell to the Initial Purchasers $500,000,000 aggregate principal amount of McDermott's 8.000% senior secured notes due 2021 (the "Notes") in a private placement in accordance with Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). The Notes are scheduled to mature on May 1, 2021 and were issued at par, for net proceeds of approximately $491 million, after deducting the Initial Purchasers' discounts and commissions and estimated offering expenses. The closing of the issuance of the Notes occurred on April 16, 2014. McDermott intends to use the net proceeds from this offering, together with the net proceeds of loans to be made under its New Credit Facilities (as defined below), (1) to replace its Prior Credit Facility (as defined below) and refinance the indebtedness outstanding thereunder and (2) for general corporate purposes, including funding working capital requirements and capital expenditures.

The foregoing description of the Purchase Agreement is only a summary and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 1.1 to this Report and is incorporated herein by reference.

Indenture

The Notes are governed by an Indenture, dated April 16, 2014 (the "Indenture"), entered into by McDermott and the Guarantors with Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). Interest on the Notes is payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2014. The Notes are unconditionally guaranteed on a senior secured basis by the Guarantors, and the Notes will be secured on a second-lien basis by pledges of capital stock of certain of McDermott's subsidiaries and mortgages and other security interests covering (1) specified marine vessels owned by certain of the Guarantors and (2) substantially all the other tangible and intangible assets of McDermott and the Guarantors, subject to exceptions for certain assets. The Notes will rank: senior in right of payment to all of McDermott's future subordinated indebtedness; effectively senior to all of McDermott's existing and future unsecured senior indebtedness, to the extent of the value of the collateral that is subject to liens securing the Notes; effectively junior to all of McDermott's existing and future indebtedness that is either (1) secured by first priority liens on the collateral, including the indebtedness under the New Credit Facilities, or (2) secured by assets that are not part of the collateral that is securing the Notes, in either case to the extent of the value of the collateral that is subject to liens securing such indebtedness; and structurally subordinated to all liabilities of McDermott's subsidiaries that do not guarantee the Notes.

Optional Redemption

At any time or from time to time on or after May 1, 2017, McDermott, at its option, may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, together with accrued and unpaid interest to (but excluding) the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period beginning May 1 of the years indicated:

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--------------------------------------------------------------------------------
                        Year                   Percentage
                        2017                       104.000 %
                        2018                       102.000 %
                        2019 and thereafter        100.000 %

At any time or from time to time prior to May 1, 2017, McDermott, at its option, may on any one or more occasions, redeem up to 35.0% of the aggregate principal amount of the outstanding Notes issued under the Indenture (calculated after giving effect to any issuance of Additional Notes (as defined therein)), with the net cash proceeds of one or more Qualified Equity Offerings (as defined therein) (which have not been applied to permanently repay other Indebtedness (as defined therein)) at a redemption price equal to 108.000% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to (but excluding) the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that: (1) at least 65.0% of the aggregate principal amount of Notes issued under the Indenture on the Issue Date remains outstanding immediately after giving effect to any such redemption; and (2) the redemption occurs not more than 180 days after the date of the closing of any such Qualified Equity Offering.

The Notes may also be redeemed, in whole or in part, at any time prior to May 1, 2017 at the option of McDermott, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium (as defined therein) as of, and accrued and unpaid interest to (but excluding) the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Certain Covenants

The Indenture governing the Notes contains covenants that, among other things, limit McDermott's ability and the ability of its restricted subsidiaries to:
(i) incur or guarantee additional indebtedness or issue preferred stock;
(ii) make investments or certain other restricted payments; (iii) pay dividends or distributions on its capital stock or purchase or redeem its subordinated indebtedness; (iv) sell assets; (v) create restrictions on the ability of its restricted subsidiaries to pay dividends or make other payments to McDermott;
(vi) create certain liens; (vii) sell all or substantially all of its assets or merge or consolidate with or into other companies; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. Many of those covenants would become suspended if the Notes were to attain an investment grade rating from both Moody's Investors Service, Inc. and Standard and Poor's Ratings Services and no default has occurred. The covenants mentioned above are subject to a number of important exceptions and limitations.

Upon a change of control, holders of the Notes will have the right to require McDermott to make an offer to purchase each holder's Notes at a price in cash equal to 101% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the date of purchase.

The foregoing descriptions of the Indenture and the Notes are only summaries and are qualified in their entirety by reference to the full text of the Indenture (including the form of Notes attached as an exhibit thereto), a copy of which is filed as Exhibit 4.1 to this Report and is incorporated herein by reference.

New Credit Facilities

On April 16, 2014, McDermott and McDermott Finance L.L.C., a Delaware limited liability company and a direct, wholly owned subsidiary of McDermott (the "Term Borrower"), entered into a Credit Agreement (the "New Credit Agreement") with a syndicate of lenders and letter of credit issuers, Crédit Agricole Corporate and Investment Bank, as administrative agent and collateral agent for the LC Facility (as defined below) and the Term Loan (as defined below) and as joint lead arranger and joint bookrunner for the LC Facility, Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner for the LC Facility, Wells Fargo Bank, N.A., as syndication agent for the LC Facility, and Goldman Sachs Lending Partners LLC, as sole lead arranger, sole bookrunner and sole syndication agent for the Term Loan. The LC Facility and the Term Loan are together referred to as the "New Credit Facilities."

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The New Credit Facilities include a $400 million first-lien, first-out letter of credit facility (the "LC Facility") which is scheduled to mature on April 16, 2017 and a $300 million first-lien, second-out term loan (the "Term Loan") which is scheduled to mature April 16, 2019. The indebtedness and other obligations under the New Credit Facilities are guaranteed by the Guarantors, which include substantially all of McDermott's material, wholly owned subsidiaries, other than its captive insurance subsidiary.

. . .



Item 8.01 Other Events.

On March 28, 2014, McDermott issued a press release announcing its intent to commence the offering of the Notes. A copy of that press release is filed as Exhibit 99.1 to this Report, which is incorporated by reference into this Item 8.01.

On April 10, 2014, McDermott issued a press release announcing the pricing of the Notes. A copy of that press release is filed as Exhibit 99.2 to this Report, which is incorporated by reference into this Item 8.01.



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

1.1 Purchase Agreement, dated as of April 10, 2014, by and among McDermott, the Guarantors and Goldman, Sachs & Co., as representative of the Initial Purchasers.

4.1 Indenture, dated April 16, 2014, by and among McDermott, the Guarantors and the Trustee.

4.2 Form of 8.000% Senior Note due 2021 (included in Exhibit 4.1).

4.3 Credit Agreement, dated April 16, 2014, by and among McDermott, McDermott Finance L.L.C., a syndicate of lenders and letter of credit issuers, Crédit Agricole Corporate and Investment Bank, as administrative agent and collateral agent for the LC Facility and the Term Loan and as joint lead arranger and joint bookrunner for the LC Facility, Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner for the LC Facility, Wells Fargo Bank, N.A., as syndication agent for the LC Facility, and Goldman Sachs Lending Partners LLC, as sole lead arranger, sole bookrunner and sole syndication agent for the Term Loan.

4.4 Intercreditor Agreement, dated April 16, 2014, by and among McDermott, McDermott Finance L.L.C., the other Guarantors, Crédit Agricole Corporate and Investment Bank, as first priority agent, and Wells Fargo Bank, National Association, as second priority agent.

4.5 Form of First Lien Pledge and Security Agreement, dated April 16, 2014, made by McDermott and the Guarantors in favor of Crédit Agricole Corporate and Investment Bank, as collateral agent (included as Exhibit D to the Credit Agreement filed as Exhibit 4.3 to this Report).

4.6 Form of Second Lien Pledge and Security Agreement, dated April 16, 2014, made by McDermott and the Guarantors in favor of Wells Fargo Bank, National Association, as collateral agent (included as Exhibit E to the Indenture filed as Exhibit 4.1 to this Report).

99.1 Press Release, dated March 28, 2014, announcing the launch of the offering of the Notes.

99.2 Press Release, dated April 10, 2014, announcing the pricing of the Notes.

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