U.S. offshore engineering and construction services giant McDermott has received a continued listing standard notice from the New York Stock Exchange (NYSE).
McDermott said on Friday it was formally notified by the NYSE that the average closing price of the company’s shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE.
McDermott’s stock last closed above $1 on November 7 when it closed at $1.38 per share. The following day, Friday, November 8, it closed at $0.97 per share. On Friday, December 13, McDermott’s stock closed at $0.83 per share.
The company plans to notify the NYSE of its intent to cure the deficiency and return to compliance with the NYSE continued listing requirements. Under the NYSE’s rules, the cure period extends for six months following the receipt of the notification.
The company’s shares of common stock continue to trade on the NYSE, subject to compliance with other continued listing requirements.
Under the NYSE rules, the company can regain compliance at any time during the six-month cure period if, on the last trading day of any calendar month during the cure period, its common stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month.
Failure to satisfy the conditions of the cure period or to maintain other listing requirements could lead to a delisting.
The NYSE’s notification does not affect the company’s business operations or its SEC reporting requirements and does not conflict with or cause an event of default under any of the company’s material debt or other agreements.
McDermott has been facing liquidity problems due to some problem projects it took over as a result of its merger with CB&I in 2018.
The company in October entered into an agreement with lenders to get access to up to $1.7 billion of additional financing, including a letter of credit capacity. Under the agreement, McDermott immediately gained access to $650 million of financing comprised of $550 million under a term loan facility and $100 million under a letter of credit facility.
The company said it would use the amounts to finance working capital and support the issuance of required performance guarantees on new projects.
Bloomberg said in November that McDermott’s $1.7 billion super-priority senior credit facility “may be a prelude to a bankruptcy loan.” The company at the beginning of November skipped an interest payment on its bonds, which triggered a 30-day grace period to make the payment or file for Chapter 11.
In early December, McDermott gained access to $350 million in financing under its super-priority senior secured credit facility. The Tranche B provided the company with a $250 million term loan facility and a $100 million letter of credit facility.
McDermott also entered into a forbearance agreement with holders of over 35 percent of McDermott’s 10.625 percent senior notes due 2024. Under the terms of the forbearance agreement, the applicable holders of the 2024 Notes have agreed to forbear from exercising any rights related to the interest payment due on November 1, 2019, subject to certain conditions. The forbearance period extends through January 15, 2020, and may be extended further by a majority of the holders party to the forbearance agreement.
According to MarketWatch, following the announcement about gaining access to the second tranche of the credit facility, McDermott’s shares soared 20% in active premarket trading on Monday, December 2. However, this was not enough for McDermott’s stock price to go over $1.
Offshore Energy Today Staff
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