Thread regarding McDermott International Inc. layoffs

Enough to cover TANKS payroll. Forget the rest of the sh*t show.

Do you mean only regular payroll or also that stack of pre-cut checks locked in the safe for retention bonuses?

Bet $100 they can’t sell tanks for enough to cover payroll.

Thank you poster, great info and agree completely.

MDR needs to stop blaming CB&i. They made the decision, no one made them do it, heck CB&I employees didn’t even want it...so stop blaming them and blame MDR’s c-appy management.

CB&I knew they were in trouble and also knew MDR didn’t do ANY due diligence. DD and his minions to blame. What a bunch of liars.

Lummus, tanks and fab have been for sale since they say they closed. Everything they say is a lie. Shame on you if you believe it.

I am the original poster.

In response to a question regarding Biding Discipline post merger: I need to give credit where credit is due. There has been a strategic initiative to learn lessons from past mistakes.

Power: One of those lessons is blowing estimates for Combined Cycle Power Plant projects (IP&L, Calpine and Asheville). However, they have ‘thrown the baby out with the bath water’. Due to “lessons learned” they have priced future Combined Cycle Power Plant estimates beyond industry norm (passively pricing themselves out), additionally they have decided to withdraw from bids and submit unqualified bids that later get dismissed from consideration.

From an investors perspective, it looks like there is no worry of new Combined Cycle Power Plant projects losing money.

From an employee’s perspective, it looks like there is no hope of new projects for the Power Division.

LNG: another lesson is blowing estimates for LNG projects and failing to execute the complicated process of cryogenically freezing natural gas (Cameron and Freeport). CB&I underestimated the complexity of the executing lump sum LNG construction. CB&I previous mega projects (Gorgon and REFICAR) were reimbursable projects. CB&I had previous success on Peru LNG. This successful project was conducted using a different work force and a substantially smaller scope (1 train. 2 tanks.)

The bids post merger have been McDermott executing the OSBL scope of the project. For those who are not familiar with “OSBL”, that means Outside Battery Limits. It’s an old Oil & Gas term to identify work outside of the process center. In other words, McDermott’s failure to execute the construction of the process effectively has given McDermott the smaller ‘bridesmaids’ portion of the scope with the lion’s share ISBL (Inside Battery Limits) going to the JV partner.

In summary: Power is dead because we learned lessons from bidding mistakes. LNG is on going in a smaller capacity with reduced scope, reduced responsibility, and reduced risk. However, when there is a press release stating McDermott won an LNG project, it’s misleading because McDermott will get a small portion of the project while the JV partner gets the real work.

Banks can call loans if financial covenants are violated. Read the K. Remember CBI?The company needs a billion and a half for working capital.

Why I'm a buyer -

1. Thousands of employees who own stock.
2. Bankruptcy? Why? No LT debt due for 4 years.
3. Ch 11 would do major Reputational Damage. Thousands of employees would loose their jobs.
4. Ch 11 - who would award contract to company in this state?

Along with re-work of all the debt structure, I think the main challenge they are trying to work out is the Pull Through rights related to Lummus. But if they cant have their cake and eat it too they will sell the whole division and be much better off financially. So its a win either way for shareholders. No way will management destroy the company with a BK filing.

Thank you for elaborating on your original post. Much appreciated. This company has been one of the most disappointing investments I have ever made. Original poster, in your estimation, has the bidding discipline of the CBI-legacy company improved whatsoever post-acquisition? Does it even matter provided the actions of management with respect to improving liquidity (e.g., halting vendor and subcontractor payments, paying employees, etc.)?

Wow. That was specific.

I am the original poster.

These Town Halls were for the Power Division.

Town Hall 1) conducted on Wednesday morning in Charlotte, NC. A McDermott Power Division Executive told audience to stay on board. Don’t worry about the company. We are bidding new power projects. The only problem was “we are too successful”. The company has to finance the front end of the new projects (site mobilizations, insurances, permits, etc), and newly awarded projects (letters of credit, bonds, bank fees, etc. Due to this dynamic, ‘we have a liquidity problem, not a solvency problem.’ There was no mention of the company servicing it’s debt.

The Executive said he has not signed a no disclosure agreement, limiting him to speak about a prospective bankruptcy.

He he has no knowledge of the company pursuing bankruptcy.

Town Hall 2) conducted Wednesday afternoon as a telephone conference. The original executive was not available to hold the meeting. He delegated to an engineer who works on the Net Power business development team. The engineer reiterated the Executive’s talking points from the previous town hall: he told the audience to stay on board. Don’t worry about the company. We are bidding new power projects. The only problem was “we are too successful”. The company has to finance the front end of the new projects (site mobilizations, insurances, permits, etc), and newly awarded projects (letters of credit, bonds, bank fees, etc. Due to this dynamic, ‘we have a liquidity problem, not a solvency problem.’

The audience was not onboard. They questioned him regarding unpaid invoices halting construction work on the power projects. The engineer stumbled through an unconvincing answer. The audience questioned him regarding the lack of confidence in the company’s PR. The engineer stumbled through an unconvincing answer. The audience questioned him regarding the likelihood of filing bankruptcy. He stumbled through reciting talking points from the morning Town Hall.

It was at this point an interim project manager who manages the $2M of warranty work at Calpine voiced his certainty that the multi billion dollar company will not file bankruptcy. The audience was unconvinced and dismissed the interim project managers comments.

The call quickly concluded as the engineer hosting the Town Hall ended the discussion.

The McDermott Power Division Executive who gave the Town Hall in Charlotte missed a massive opportunity to settle the uncertainty. Rather his absence created more uncertainty. There is no confidence in the Executive’s leadership to effectively navigate the current climate.

Now the quarter close is among us. Accounting and Finance are hard at work to make this disaster look it’s best.

Can they come after stay on bonuses if the co goes under?

The lack of specifics from the poster confuse me. Describing it as "Epic Disaster" seems alarmist to say the least. Can you elaborate on management's comments with respect to going concern risk? Are they confident the issues can be worked out outside of a court process?

I just saw a reply from a reporter from Bloomberg...now it’s gone?

I will search for the reporter online. I think she is the writer of the Bloomberg article that came out last week.

Hi there,
My name is Allison McNeely and I'm a reporter at Bloomberg News. I've been following McDermott and I'd love to talk to you about this. You can reach me at amcneely@bloomberg.net.
Best,
Allison

MDR has been an epic disaster for some time now.

“Tanks Sale and remaining Pipe Fab Shop sale was been pushed to Q4”

The sale of these assets: management has kicked this can down the road for more than a year. Each quarter they repeat the same line “the sale will close next quarter.”

Either 1) they can’t get the $ they want for them or 2) they don’t really want to sell them, with hopes cash relief will come from other sources

In related news: the Tank Division will not mobilize to McDermott construction projects without being paid upfront.

So has there been any mention of the Fab side being sold? We are hearing it will be sold at the end of October.