McDermott Prices $500M Senior Notes - Analyst Blog
April 11 2014 - 6:00PM
Zacks
Offshore oil and gas-focused engineering and construction firm,
McDermott International Inc. (MDR) has priced
senior secured notes worth $500 million. The second-lien notes,
carrying an interest rate of 8.00%, are expected to mature by 2021.
The offering is likely to close on Apr 16, 2014.
The senior notes will likely be priced at par and are expected
to be offered to selected institutional investors. McDermott
reveals that the net proceeds of roughly $491.0 million will likely
be utilized for refinancing revolving credit facility under its
present credit contract. The funds will also be spent on normal
corporate activities.
McDermott is planning to release its first-quarter 2014
financial results on May 7, 2014, after the closing bell. The Zacks
Consensus Estimate for the company’s first-quarter is pegged at a
loss of 9 cents per share.
Houston, Texas-based McDermott primarily serves the worldwide
offshore oil and gas field developments, including the front-end
design and detailed engineering, fabrication and installation of
offshore drilling and production facilities.
On Mar 31, 2014, McDermott declared that its first-quarter 2014
results might not meet its recent projection. Moreover, the company
apprehends that its profit margin, from the operation of backlog
projects, will not be able to cover its fixed expenses − direct
operating costs and general and administrative expenses – and
restructuring costs.
Thus, McDermott currently has a Zacks Rank #5 (Strong Sell),
implying that it is expected to significantly underperform the
broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better ranked players in the energy
sector like Range Resources Corp. (RRC),
Helmerich & Payne Inc. (HP) and Unit
Corp. (UNT). All the stocks sport a Zacks Rank #1 (Strong
Buy).
HELMERICH&PAYNE (HP): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
UNIT CORP (UNT): Free Stock Analysis Report
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