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J. Ray McDermott, S.A. ("J. Ray"), a subsidiary of McDermott
International, Inc. ("McDermott") (NYSE: MDR), announced
today that it has commenced a cash tender offer and consent solicitation
(collectively, the "Offer") to purchase all of J. Ray's
outstanding 11% Senior Secured Notes due 2013 (the "Notes"),
with an aggregate principal amount of $200 million outstanding.
The Offer will expire at 5:00 p.m., New York City time, on June
1, 2006, unless extended (the "Expiration Date").
In connection with the tender offer, J. Ray is soliciting consents
from holders of the Notes to (i) amend the indenture governing the
Notes to eliminate or modify most of the restrictive covenants and
certain other provisions of the Notes and the indenture and (ii)
authorize amendments to collateral documents that provide security
for the Notes, in order to allow J. Ray and its subsidiaries to
grant second-priority liens on the collateral.
The total consideration for each $1,000 principal amount of the
Notes validly tendered and accepted for payment by J. Ray pursuant
to the tender offer will be based upon a fixed spread of 50 basis
points over the yield on the 3.375% U.S. Treasury Note due December
15, 2008, to be calculated by the Dealer Manager in accordance with
standard market practice on May 17, 2006. The total consideration
includes a consent payment of $30 per $1,000 principal amount of
Notes validly tendered and accepted for payment by J. Ray prior
to a consent payment deadline (the "Consent Date"), which
is expected to be 5:00 p.m., New York City time, on May 16, 2006.
Holders who tender Notes after the Consent Date will not receive
the consent payment. Holders cannot tender their Notes without delivering
their consent and cannot deliver their consent without tendering
their Notes. In addition, J. Ray will pay accrued and unpaid interest
up to, but not including, the settlement date, which will be promptly
following the Expiration Date. Assuming all Notes are properly tendered
and accepted, J. Ray anticipates it will recognize approximately
$50 million of expense from the early retirement of the Notes and
other transaction costs, and will use approximately $250 million
of its cash on hand to fund the Offer.
The Offer is subject to the satisfaction of certain conditions,
including, among other things, the receipt of consents from holders
of at least two-thirds of the principal amount of the Notes and
completion of a proposed senior secured credit facility of up to
$500 million. All terms and conditions of the Offer are set forth
in J. Ray's Offer to Purchase and Consent Solicitation Statement
dated May 3, 2006 (the "Statement") and the related Letter
of Transmittal and Consent. Subject to applicable law, J. Ray may,
at its sole discretion, waive any condition applicable to the Offer
or extend, terminate or otherwise amend the Offer. Neither Notes
tendered pursuant to the Offer nor the related consents may be withdrawn
or revoked unless the Offer is not consummated, except to the extent
required by applicable law.
Credit Suisse Securities (USA) LLC will act as Dealer Manager and
Solicitation Agent, Morrow & Company, Inc. will serve as Information
Agent and The Bank of New York will act as Depositary in connection
with the Offer. Questions regarding the Offer may be directed toll-free
to the Dealer Manager at (800) 820-1653 or collect at (212) 538-0652.
Requests for documentation may be directed toll-free to the Information
Agent at (800) 607-0088.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of an offer to sell securities,
with respect to any of the Notes. The Offer is being made solely
pursuant to the terms of the Statement and related Letter of Transmittal
and Consent. Each Noteholder should read the Statement and accompanying
documents, as they contain important information.
None of the companies referenced herein, including J. Ray McDermott
or any of the agents, make any recommendation in connection with
the Offer.
J. Ray McDermott is a leading provider of engineering, procurement,
construction, and installation services for offshore oil and gas
field developments worldwide. McDermott International, Inc. is a
leading worldwide energy services company. McDermott's subsidiaries
provide engineering, construction, installation, procurement, research,
manufacturing, environmental systems, project management and facility
management services to a variety of customers in the energy and
power industries, including the U.S. Department of Energy.
In accordance with the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995, McDermott cautions that statements
in this press release, which are forward-looking and provide other
than historical information, involve risks and uncertainties that
may impact actual outcomes. These forward-looking statements include
our statements regarding the costs, terms, conditions and schedule
of the Offer. Those statements are subject to numerous uncertainties
and risks including, without limitation, that the Offer may not
be consummated on the terms described herein or that Notes tendered
pursuant to the Offer may not be accepted for payment. For a more
complete discussion of these risk factors, please see McDermott's
annual report for the year ended December 31, 2005 filed with the
Securities and Exchange Commission.
For more information, please contact:
Louise Denly
Director, Public Relations
J. Ray McDermott, Inc.
Houston, TX
(281) 870-5000
E-Mail:ldenly@mcdermott.com
www.mcdermott.com
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