McDermott International

A company files Chapter 11 once and calls it a lesson learned. McDermott International filed

once in 2020, wiped out four point six billion dollars of debt, walked out with a fresh board and five hundred forty four million dollars of funded debt against two point four billion dollars of letter of credit capacity, and called it a new foundation. Four years later it was back in court, this time three courts at once, a UK Restructuring Plan and two Dutch WHOA proceedings running in parallel, recognized simultaneously by a US Chapter 15 filing so the whole compromise would bind creditors on three continents at the same time. That closed in March 2024. It is now July 2026, and McDermott just priced five hundred fifty million dollars of new bonds at ten and a half percent interest and opened a five hundred million dollar equity rights offering backstopped by its own largest shareholders. Three trips to the capital structure in six years, on a company that reported ten billion dollars of revenue last year and beat its own guidance doing it.

Start with where the debt came from, because it did not arrive by accident. In 2018 McDermott combined with Chicago Bridge and Iron for a purchase price near four point six billion dollars, and CB&I brought a set of fixed price LNG and refinery projects that had already gone wrong before the ink dried. Two of them, the Cameron LNG export facility in Louisiana and the Freeport LNG facility in Texas, burned cash for years after the merger closed. A third piece of the CB&I legacy, the Cartagena refinery expansion built for Colombia’s Reficar, had blown through its original four billion dollar budget by roughly double before McDermott ever inherited the liability, and the dispute over what Reficar was owed followed McDermott into both restructurings, forcing English and Dutch courts to argue over what fraction of a nineteen point nine percent equity stake a wronged Colombian counterparty deserved for an arbitration award that predated the merger entirely. McDermott’s own regulator found, years later, that CB&I project managers had overridden their own cost engineers’ loss forecasts on that same Cameron project by hundreds of millions of dollars to keep the numbers looking survivable. The debt McDermott carried into 2020 was not McDermott’s mistake. It was CB&I’s mistake, worn by the company that acquired it.

Now look at what the operating business actually does, because this is where the story gets interesting instead of just sad. First quarter 2026 revenue came in at two point four billion dollars against a planned one point nine billion, adjusted EBITDA at a hundred seventeen million against a planned ninety nine million, backlog at seventeen point six billion dollars, built on one point four billion dollars of new awards in the quarter alone. Full year 2025 revenue reached ten billion dollars, adjusted EBITDA four hundred twenty eight million, trailing twelve month EBITDA four hundred eighty nine million, and the company finished the year with eighteen point two billion dollars of backlog including first LNG achieved on Train 1 of the Golden Pass export facility in Texas, the same project class that once nearly sank it. McDermott is winning work. Aramco selected it for a long term project management consultancy agreement in June. Qatar handed it a landmark decommissioning engineering contract for the country’s first major offshore decommissioning project. The operating engine runs.

Here is the stress test, and it is a simple one. Four hundred twenty eight million dollars of adjusted EBITDA on ten billion dollars of revenue is a margin of roughly four percent. That is the entire cushion an engineering and construction contractor has to absorb a bad quarter, a delayed milestone payment, or a war disrupting a project site, which is not hypothetical, McDermott’s own first quarter filing named Middle East conflict disruption as a direct cost item running into the millions of dollars, on top of first quarter cash flow that was used, not generated, to the tune of a hundred twenty six million dollars even as revenue beat plan. Layer the new financing onto that margin. Five hundred fifty million dollars of bonds at ten and a half percent costs roughly fifty eight million dollars a year in interest alone, close to twelve percent of trailing twelve month EBITDA, before a single dollar of the older term debt or letter of credit facility is serviced. A four percent margin business does not have twelve percent of its EBITDA to spare on one bond coupon. It has that money because its own largest shareholders backstopped a rights offering to make sure it did, the same category of investor that took ninety four percent of reorganized equity in 2020 and absorbed the compromise again in 2024, writing a third check because the alternative was watching the first two checks go to zero.

That is the actual business model here, and it deserves its own name separate from the engineering work. McDermott refinances. Not once, as a company might if a single acquisition went wrong. Structurally, on a clock that keeps landing somewhere between three and six years, because a fixed price contracting business with a four percent margin has almost no room to absorb the debt load that a single bad merger, a single war zone disruption, or a single blown project estimate leaves behind. The engineering keeps getting done. The projects keep getting delivered, Golden Pass Train 1 is real LNG flowing today. But the capital structure underneath that engineering has never once been built to survive the industry it operates in without coming back to the same shareholders and the same courts to be rebuilt again.

Sources: McDermott International first quarter 2026 and fourth quarter and full year 2025 results, McDermott 2026 Annual General Meeting results, Norton Rose Fulbright and Kirkland and Ellis analysis of the 2024 UK Restructuring Plan and Dutch WHOA proceedings, Davis Polk summary of the 2020 Chapter 11 plan of reorganization, McDermott Nordic bond offering and equity rights offering press release July 2026, US Securities and Exchange Commission administrative order on CB&I project accounting.