MOSCOW (MRC) -- McDermott International, Inc. has announced that the company intends to move forward with the previously announced share and asset purchase agreement to sell all of the Lummus Technology business to a joint partnership between The Chatterjee Group and Rhone Capital (the "Joint Partnership"), as per Hydrocarbonprocessing.
McDermott did not receive a higher or better bid during the solicitation period, and the auction previously scheduled for Monday, March 9, 2020, will not occur.
As announced on Jan. 21, 2020, subsidiaries of McDermott entered into a share and asset purchase agreement (the "Agreement") to sell Lummus Technology to The Chatterjee Group and Rhone Capital, as the "stalking horse bidder," for a base purchase price of USD2.725 billion, subject to higher or otherwise better bids received through a court-supervised auction process. Under the terms of the Agreement, McDermott will have the option to retain or purchase, as applicable, a 10 percent common equity ownership interest in the entity purchasing Lummus Technology.
The sale hearing to confirm the sale of Lummus Technology to the Joint Partnership will take place on Thursday, March 12, 2020, at 9:00 a.m. CT.
Proceeds from the sale of Lummus Technology are expected to repay McDermott's DIP financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity.
As MRC informed before, in late November 2019, McDermott International, Inc. was awarded a sizeable technology contract from Baltic Chemical Company (BCC) and a sizeable Extended Basic Engineering (EBE) contract from China National Chemical Engineering No. 7 Construction Company Limited (CC7). The ethane cracking project is owned by Baltic Chemical Complex LLC, a subsidiary of RusGazDobycha. McDermott's Lummus Technology will provide both the Process Design Package (PDP) Engineering and the license for its olefin production and recovery technology. Lummus Technology's proprietary ethylene steam cracking process is the most widely-applied process for the production of polymer-grade ethylene, representing approximately 40 percent of the world's capacity.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
McDermott is a premier, fully integrated provider of technology, engineering and construction solutions to the energy industry. For more than a century, customers have trusted McDermott to design and build end-to-end infrastructure and technology solutions to transport and transform oil and gas into the products the world needs today. Our proprietary technologies, integrated expertise and comprehensive solutions deliver certainty, innovation and added value to energy projects around the world. Customers rely on McDermott to deliver certainty to the most complex projects, from concept to commissioning. It is called the "One McDermott Way." Operating in over 54 countries, McDermott's locally focused and globally-integrated resources include approximately 32,000 employees, a diversified fleet of specialty marine construction vessels and fabrication facilities around the world.