McDermott International (NYSE: MDR), already facing financial issues, saw its shares lose over 60% of their value over two days after reports had arisen that the company was seeking to file bankruptcy.
McDermott, an engineering company specializing in oil production facilities, was victim to a devastating single-day drop after the Wall Street Journal reported that it was seeking options for bankruptcy. The announcement came during trading on Monday; after the release of the article, McDermott shares plummeted over 60%, only recovering slightly to end the day at around 50% down. On Tuesday, McDermott fared little better, losing 15% of its already low-price during pre-market trading. McDermott's performance at the stock market has been dreary, with prices falling below $1 around November and remaining low into the new year. The lackluster performance has caught the attention of NYSE administration, which gave the company an ultimatum to get its price above $1 in six months or it would be delisted from the exchange.
The frightening warning from the NYSE and the devastating single-day losses are only the most recent of McDermott's woes. In November, the company issued a sobering quarterly report; at Q3, McDermott had posted a net loss of $1.9 billion and an operating loss of $1.7 billion. Just before its Q3 report, signs of poor fortune were already blatantly visible as McDermott's stock price tumbled on news it had taken on advisers for turnaround advice. Adding to the situation is the inability of McDermott to integrate Chicago Bridge & Iron Co, with the company struggling to clear out its acquisition's backlog of orders on top of its own outstanding orders.
As reported by sources close to the company, McDermott has been discussing filing for bankruptcy with lenders. Among the lenders named that were potentially in talks with McDermott were Baupost Group LLC and HPS Investment Partners LLC. Already, McDermott has acquired a $1.7 billion rescue package along with a forbearance agreement with its creditors; however, this agreement expires on January 15; the expiration of the agreement may be the catalyst, or at least a large contributor, to the company exploring the possibility of filing for bankruptcy.
At this time, neither McDermott nor the lenders it was supposedly in contact with had offered any comments to the press.