Thread regarding McDermott International Inc. layoffs

If your division is profitable, you are susceptible to being sold. If your division has no backlog, you are susceptible to layoffs. The sweet spot is a lot of work but losing money, the more the better. We are long past the point where cutting headcount will matter, so don't sweat it. At least for awhile.

Why are they selling all the good stuff to pay to keep the bad stuff alive? Even if bankruptcy wipes the slate clean, how long will the leftovers last? Look at those slides filed with the SEC. Project losses all over the place! It's not just the focus projects, it's not just the debt. MII doesn't know how to manage a project. Or a company. MII is s—ing investor capital into a black hole, never to see daylight again. The only way to survive is to get as far away from it as possible.

Which division is at most risk? How about offshore division? Do Mcdermott has enough workload on offshore?

So what does this all mean for restructuring, specifically as it regards layoffs? Who's most at risk? And when?

Holy sh–, am I reading those slides right?!! $200 million in project losses just in 3Q this year, incl $113million from the Fuc-us Projects? A year ago Dickless said "Secondly, we expect no further material changes in the cost estimates on the legacy Focus Projects, which we believe have been significantly and incrementally de-risked as compared to where we were in Q2." He also said they had gained a much deeper understanding of the projects a mere 9 months after agreeing to pay 3.8 billion for CBI. That they reviewed the portfolio and identified no other projects with significant execution risk. That tanks and pipes were going to sold for $1 billion to pay down debt. That they were selling $300 million in 12% preferred equity. And the cherry on top ... the appointment of the new COO.

Bravo! Bonus earned! (stupid a–holes)

So it seems even management is talking about how close they are to "bankruptcy" and what they have to do to avoid it. Scoff all you want but OF COURSE THEY ARE PLANNING FOR IT!! Look at their slide deck filed with the SEC.

https://www.sec.gov/Archives/edgar/data/708819/000119312519270495/d24467dex992.htm

Q on Q they tried to spin a rosy tomorrow, even though you know they had another month's of numbers by the time of earnings release. But, "nope, all good now, bad time's behind us!" I like being lied to by my company even less than by my husband, it really pisses me off. Now they are straighttalking and I assure you it's because their lawyers are telling them they have to. If they are using the "b" word, they are planning for it.

Speaking of earnings release ...when? I never got the email. I'm kinda expecting more news before they stammer and bumble their way through another call with fund managers who will justifiably lose their bonuses, if not their jobs, for losing their clients money by not bailing on the POS company. Goddamn useless stock analysts.

https://www.bloombergquint.com/business/mcdermott-surges-after-it-secures-650-million-of-new-financing

To Cary T,

If your really an investor you should learn something about the industry you invest in. The “backlog” goes with the division when it’s sold. So any awards for tanks, piping or Lummus disappear with the division. Additionally the buyers rarely will take on the projected loss so the selling company loses the backlog but keeps the responsibility of the project loss. If you look at mcdermott over the long term they have never been known as a company with a reputation for running efficient projects. They are known for a company that executes low tech “cookie cutter” projects in the Middle East where they have very little competition.

To Cary T, how much $ is coming in, what gets paid? Do the T accounts.

Bankruptcy doesn't have to be for all companies. Maybe just Heritage CBI after Lummus sale. But the suppliers will try to pull more into the black hole. Bankruptcy is a process, there will be extended negotiations before it starts, lots of pain during, a struggle to appoint a trustee. You will see people at their worst. Wish I could be a fly on the wall.

If you really worked for McDermott you would not be saying any of that.

I work for McDermott.

I have enjoyed working with a great team and a great environment. I believe McDermott is here to stay. All companies make mistakes and learn from it.

At McDermott we, the engineers are impowered to make decisions, focus on safety, client satisfaction, team work and let us put our family first.

I can not speak for other employees, but for me, I will stay with McDermott all the way. I love this company and the way we are treated by our managers.

I am confident that there is no bankruptcy plan and if this ship goes down, I rather stay with the team all the way. McDermott will survive and have a great comeback!!!

Whether or not bankruptcy is on the horizon, what are the plans for layoffs? As of yesterday, Oct. 24, 2019, some in the Power group received notification that their services will no longer be needed as of an as-yet undetermined point in the very near future. Will other layoffs go by whole groups, whole departments, or by percentages of each? And when?

I am an investor, I believe the previous messages to be credible, by the tone of their narrative. However none of the posts mention the affect that the sale of Lummus will have on the balance sheet.

The Lummus sale should enable MDR to return to return to a pre-CBI state, where they had about $500MM in LT debt, and a $20B backlog.

Right but I'm still getting my retention bonus, right?

Original Poster:

When I said preparations are being made for life after bankruptcy, it wasn’t a metaphor. It is a stone cold fact.

All levels of Project Management, Finance and Project Controls are actively preparing for a Doomsday scenario.

This is not to be debated. It is a fact.

You can put your head in the sand, but Management and Executives are visiting each jobsite to be proactive in attempts to prepare the projects as much as possible.

If you work in an engineering office, call your insider friends at sites to confirm. If you work on the jobsite, you can confirm the recent visits and nervous phone calls.

100% fact.

Original Poster: The $1.7B loan is not a lifeline. It is essentially the equivalent of throwing a cinder bloc to someone drowning. McDermott does not get the full $1.7B. They have access to $650M today. They get access to the remainder after they prove the company won’t default on the first $650M.

Can they file for Bankruptcy after the loan? Yes. Why? Because the loan does very little to help the overall balance sheet with the 12% interest. This loan has strict payback terms. It is a mechanism that causes the company to be cash poor and cash flow will remain tight because of the strict pay back terms. This loan is payable before all other debts and bond holders. This is called a Super Priority Note. Translation: when/if they file for Bankruptcy, the very first checks cut will be to pay a back the Super Priority Notes ($650M). The banks will get their $650M before anything else gets paid, including bond holders, shareholders and PAYROLL (in that order).

These notes get paid before licensors on Cameron & Freeport, before GE on Asheville, before Mitsubishi on Lake Charles and Montgomery County, before the modular fabricators on the Offshore.

The problem with McDermott has been paying BOTH the interest on the debt (servicing debt) and supporting projects (subcontracts and vendors). The talking points from management has been “We have been a victim of our success. We have to pay for all of these Letters of Credit”.

That is laughable. It is partially true, but it is a lipstick on a pig. They are trying to cover up the fact that LNG, Power and a few Offshore losses have taken their tole on the balance sheet by forcing MDR to take on more debt to cover the losses.

This brings everything full circle. The problem with McDermott has been paying BOTH the interest on the debt (servicing debt) and supporting projects (subcontracts and vendors).

I have not shorted the stock. I will never short the stock because everyday I wish for McDermott to pull out of this nosedive.

To the poster who mentioned only Executive Management would know this. You are half correct. This information starts with executives and trickles down to the management levels for implementation. We as managers sit in on meetings, calls and are CC’d on emails. We use our own discernment and analytical skills to forecast cost and political moves.

I encourage those who remain skeptical, about reading the post from an anonymous source, to do your own research. Ask the people who are asked by the executives to implement their plans.

Please, don’t take my word on it, do your own research.

I work at McDermott also. Thank you for your message and information. I would love to get your opinion on the following:

Are they planning for Bankruptcy even after getting a loan? I can't imagine that would happen right after they inked a deal. Do you think they will spin-off something good on earnings call to get people s—ed in and then at a later time restructure the company?

Also, I would be surprised they would restructure so quickly after the loan. If they didn't get the loan then I would totally agree with you 100 %.

Would love your thoughts?

Didnt they just get a 1.7 billion dollar lifeline. People say the stupidest c-ap.

Only executive management would know stuff like this, and they wouldn't be spreading the info to people who post things on thelayoff.com. ER is next week. I encourage anyone reading this to wait and see what comes out of that, rather than listening to anonymous authors on an untrustworthy site, that are more than likely shorting the stock. At the very least they are a disgruntled employee who is hearing and spreading rumors. More than likely, they are just a short seller looking to make a buck.

Still getting retention bonus right?

I have been trying to tell people for some time now to watch the Offshore/Heritage McDermott All the focus has been on the CBI related issues, deliberately so, but the performance of the other sectors is not good. The ExCom and majority of senior managers in the heritage McDermott sector are ineffectual and arrogant, bluffing their way through a series of losses. They will have to come clean at some point.

A company cash strapped that has to get a loan to pay the bill.... How can layoffs not come next. It's just common sense. Stop the outflow of cash.

Original Poster: if you don’t believe the post, then I encourage you to ask people in Finance how the cash flow is. I encourage you to ask people your project Accountant if they are pushing for earlier payments on invoices. I encourage you to ask your project Subcontracts manger / and Procurement Manager if invoices are being paid. I also encourage you to ask them if they have made preparations for a Doomsday scenario where they have to replace specific vendors/subs bc they are going to let their invoices be handled in a restructuring (bankruptcy).

I also encourage you to ask your manager if they have been approached to make a plan to navigate manpower (attrition) through a restructuring. I know for a fact, all 3 power jobs have or are in the process of this Doomsday planning. Cameron and Freeport have been trying to finalize these plans, but have proved to be problematic because of projected craft attrition and vendors. The offshore projects (that were once thought to be isolated from onshore matters) are also trying to tread water. The McDermott offshore projects are being hurt by non-payment of invoices. This is a worldwide issue.

Executives have given the instruction to siphon off all ‘non-essential’ revenue to cover loses / expenses (debt servicing) to make it through the last 3 quarters.

Again, I’m trying to relay information. If you don’t believe me, I encourage you to ask, and be persistent to find to the facts hidden underneath the corporate talking points.

Original Poster: I work for McDermott. I have authored a number of these posts. My sources are direct communication with executive management and other decision makers. I have been fortunate enough to be made available to information. My only intention is to give fellow McDermott employees a clear view behind the scenes.

I believe that everyone should know the current state of affairs. It will allow them to make the appropriate decisions for their careers as well as their families.

I do my best not to be alarmist. I try to be as matter of fact as possible.

I am tired of the intentionally misleading information from executive management. I am further tired and disgusted with the “Everything is Awesome!” approach to fixing these problems, while ignoring common sense.

Can this poster please give a sense of how he/she knows this information? It is very hard to trust an anonymous online post.