According to the Wall Street Journal, McDermott International’s lenders agreed “to wait at least six more days before they declare a default, the engineering company said as it continues restructuring negotiations“. The initial forbearance was due to expire on the stroke of midnight (the BDC Credit Reporter is adding dramatic effect) on January 15th, 2020 after a missed interest payment in November of 2019.
Nonetheless, not all is well between junior and senior lenders, with the latter more forgiving and flexible and the former less so, leaving the possibility of an inter-creditor battle if and when Chapter 11 occurs, which we consider an imminent possibility. For the moment, though, as the WSJ indicates : “Lenders could have let the forbearance expiration on the junior bonds trigger a cross-default. They instead made a deal with the company to wait until at least Tuesday before declaring a default on their own claims“.
We expect to be updating the McDermott story, which we’ve written about 6 times since September 2019, shortly.