A f&*^up of immense proportions….

You know it takes a lot of gumption to put this statement out…:

We are ahead of our plan to become a premier, fully integrated, global EPCI provider, with product solutions spanning on-shore and off-shore from concept to commissioning

When you have just written off ~$750m, burned through operating cash of $221m in the quarter,  have had to undertake a capital raise (~$300m in private redeemable share placement and increase working capital facilities), and sell businesses with $1.5bn in revenue… McDermott shares at the time of pixel are down around 45% to $7.

Which part of the plan was that?

The MDR and CBI merger was always about stopping someone buying them. Instead, as was obvious at the time, they have ended up with a bunch of on-shore, low- margin, construction contracts, which management didn’t know enough about to due diligence properly. There is no return from here. McDermott will never have enough capital now to compete as a new entrant to transition into deepwater as a tier 1 player, and never have sufficient skill to bid the CBI business properly. You can start to write their obituary now. In time the offshore business could well be sold to Subsea 7 for a fraction what they gave it  away to the CB&I shareholders for.

One thought on “A f&*^up of immense proportions….

  1. I have worked for, or with, MCD three times in my career. They have shown a remarkable facility for buying into an operation and then cratering or discarding it. More than once they have been written off as dead and yet miraculously risen again. Twice in the last thirty years it has been said that they were dead but did not know it. Third time is NOT a charm ? The next year will be brutal in all sectors offshore in any case. The key to survival would appear to be in owing the investors more than they can, or are willing to, lose.

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