Thread regarding McDermott International Inc. layoffs

"Take a deep breath and relax..."

Messaging. Told move was delayed because of punch list items unfinished. But now we find out that that the contractor stopped work because they haven't been paid $14mn.

Messaging. Told that MDR received unsolicited OFFERS (more than one?) valuing Lummus at $2.5bn. But if you read it, sounds like maybe no one offered to buy 100% Lummus or that MDR even want to sell all it all so they keep pull through. So maybe there's not really $2.5bn cash coming to solve the cash flow problem.

Messaging. Told that MDR "routinely hires external advisors to evaluate opportunities for the company" after WSJ reported that MDR engaged a turnaround consultant to help stem losses and improve cash flow. The stock price dropped 50% and trading in MDR stock was halted and then fell more. But now this turnaround expert is a C-level executive, Chief Transformation Officer, required by the new credit agreement. When did this change from being just "routine" and "external"? The lenders forced a change in the C-suite, echos of June 2017 at CBI? Meanwhile the new loan has terms that resemble debtor in possession loan in bankruptcy according to Bloomberg.

Bloomberg also said about the stock market drop "Investors were unnerved because they’d been led to expect that the company would announce it had successfully completed a sale of certain businesses before the end of the third quarter. Instead, McDermott disclosed it hired advisers to study strategic alternatives, including a sale of its Lummus Technology business." Led to expect. Messaging.

Executives get retention bonuses. Why? Because they might leave? How bad is it if the executives might all quit? DD gets $3.4mn. Why? Because of the humiliation of bringing in an outsider to fix the company he wrecked? The CFO resigned right after the 10Q was filed, walking away from his retention bonus. If he really quit, that's far worse than if he had been fired.

10-Q includes a going concern risk. Should you shrug it off? 10Q shows $5bn in negative working capital. That's $5bn that needs to be paid in the next year that MDR don't have the funds for. Refinance some, sell some assets, then what? MDR have negative operating margins. That means MDR are losing money on every unit sold. Before SGA, before writedowns. What do MDR sell, what costs are creating losses? Materials, equipment and your labor. What costs will be cut? Material and euipment? Your labor?

Look, MDR are trying to put lipstick on this sh– sandwich. But you need to sc-ape the lipstick off and take a hard look at how really sh–ty this situation is. Every few days, the situation is worse than what you thought based on the messaging. Why, the messaging? How bad is it really?

You are being managed. You need to think for yourself and take care of yourself.

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Post ID: @11XJWLM1

5 replies (most recent on top)

If layoffs happen, when they happen, it won't affect MDR's fate. Or survival. The point will be to keep the company from not making payroll. We can't stop the jobsite or assembly line. So if you charge time to WIP, you should be fine for now.

For just the 3 months ending 9/30 MDR had negative operating margin of $53mn, operating loss of $1.6bn, and net loss of $1.8bn.

Negative cashflow from operations for 9 months was $563mn.

Assume average cost per employee is $100,000 or 25,000/quarter. How many people need to go? Just to stop the bleeding 2120 to 5630. Maybe more because there be another 2 months of losses. And more to get ahead of it. That's 6%-17% of headcount. And they can't outsource these positions, not since burning all those bridges with suppliers.

Hard to imagine MDR s—ing more than it does now, but it will.

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Post ID: @11XJWLM1-3qye

After Thanksgiving sounds about right, maybe sooner. I've heard it's going to a "pre-packaged" deal so it will be a quickie and most people should be fine. Perhaps a bit embarrassing for those first few weeks.

Hopefully DD is shown the door and we get an upgrade. No guarantees on that one though, c—roaches have a knack for survival.

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Post ID: @11XJWLM1-3xcf

I think a lot of us will get that "don't come in on Monday" call over the thanksgiving holiday.

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Post ID: @11XJWLM1-1erd

I’m not sure I know anyone who “quits” a 3.0m a year job with a 1.0m bonus awaiting them if they stay.

If the company is in such good shape why isn’t the excom loading up on shares with their own money. Seems like if this is all one big misunderstanding buying shares Is free money.

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Post ID: @11XJWLM1-1qeg

Well said

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Post ID: @11XJWLM1-1yny

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