From Wooden Rigs to Financial Ruin: The McDermott Survival Saga

McDermott International’s history is a gripping narrative of innovation, ambition, and near-total collapse. Founded in 1923 by Ralph T. McDermott in Texas, the company began constructing wooden oil drilling rigs before rapidly evolving into a pioneer of offshore energy infrastructure. It built the first out-of-sight-of-land steel platform in 1947, launched purpose-built offshore vessels, and contributed to nuclear and wartime projects, establishing itself as a global engineering leader. Its ascent culminated in a 1958 NYSE listing and decades of technological firsts. However, its trajectory was derailed by two catastrophic financial crises. The first stemmed from its 1978 acquisition of Babcock & Wilcox, which later exposed McDermott to over $1.6 billion in asbestos litigation from hundreds of thousands of claims—eventually leading to the spinoff of the unit in 2010. The second crisis emerged from its 2018 merger with Chicago Bridge & Iron (CB&I), a deal intended to create a vertically integrated energy giant but which instead saddled McDermott with massive liabilities, including a $2 billion arbitration claim from the troubled Reficar refinery project in Colombia. Compounded by operational integration failures and the global economic shock of the COVID-19 pandemic, the company reported a $1.9 billion quarterly loss and filed for pre-packaged Chapter 11 bankruptcy in January 2020. It successfully restructured by mid-2020, eliminating $4.6 billion in debt and raising $2.4 billion in credit capacity, largely through the $2.725 billion sale of its Lummus Technology division. Yet challenges persisted, as the unresolved Reficar claims threatened liquidity, forcing a second, cross-border restructuring in 2023 via proceedings in the Netherlands and UK. This complex legal maneuver ’crammed down’ the arbitration liabilities and extended financial facilities to 2027, costing $152 million in advisory fees but securing stability. Today, McDermott continues as a key player in global energy infrastructure, executing major LNG projects in Qatar, Australia, and the Americas, and even supplying NASA with the world’s largest hydrogen cryogenic sphere. The company’s legacy is one of extraordinary engineering achievement shadowed by cautionary lessons in due diligence, corporate risk, and the human cost of financial upheaval. Despite repeated brushes with extinction, McDermott endures—a testament to strategic restructuring, resilience, and the enduring demand for large-scale energy construction in a volatile world.

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