Rumours that Houston oilfield service company McDermott International is engaged in bankruptcy talks with lenders sent the company’s stock price plummeting by as much as two-thirds of its value after the close of market on Monday.
In a Monday afternoon post, the Wall Street Journal reported that McDermott is preparing to file for Chapter 11 over the next few weeks and that a group of lenders led by the New York investment firm HPS Investment Partners and Boston hedge fund operator Baupost Group are in talks to provide the struggling Houston company with a loan of around $2 billion to maintain operations during bankruptcy.
Official from McDermott, HPS Investment Partners and Baupost Group declined to comment.
Traded on the New York Stock Exchange under the ticker symbol MDR, McDermott’s stock was trading at $1.62 per share just before 3 p.m. Monday. Stock prices fell down as low as 60 cents per share in 20 minutes time and has since been seesawing at or below $1.01 per share.
McDermott’s stock had been trading at less than $1 per share since early November prompting the New York Stock Exchange to issue a delisting warning that gave the company six months to get its stock price back above that threshold.
Shares of McDermott returned above the $1 per share threshold two weeks and had managed to stay there until Monday’s market rumours.
The stock price fall was the latest in a series of troubles for McDermott. The company’s stock was trading just below $6 per share in mid-September when market rumours that the company had contracted the services of a bankruptcy advisory firm also sent prices plunging.
The company later posted an eye-popping $1.9 billion loss during the third quarter, which was mostly attributed to $1.5 billion in impairments related to its recent stock price plunge and cost overruns on at least six projects in North, Central and South America.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.