McDermott to explore sale of Lummus Technology unit; shares jump 50%
NEW YORK (Bloomberg) - McDermott International, the energy industry contractor whose bonds and shares plunged this week, said it’s weighing the sale of its Lummus Technology business after getting approaches that valued the unit at more than $2.5 billion. The shares soared.
The company also said Friday that it continues with efforts to sell the remaining part of its pipe fabrication business and its industrial storage tank business.
- The potential sale of Lummus may give the Texan engineering company some breathing room as it works with debt restructuring specialist AlixPartners.
- On Wednesday, after the hiring of AlixPartners was reported, McDermott’s stock plunged as much as 76% -- trading was halted for volatility at least five times -- while its bonds dropped more than 30 cents to 37 cents on the dollar. They fell again Thursday.
- McDermott has struggled since the 2014-2016 oil-market collapse saw new orders dry up and a squeeze on cash flow. Its challenges grew with the 2018 acquisition of Chicago Bridge & Iron Co. and a debt burden that’s ballooned to about $4.3 billion.
The shares jumped, rising as much as 50% in pre-market trading in New York.
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