J. Ray McDermott sets pricing, gets tenders for all 11% notes

By Jennifer Chiou

New York, May 17 - J. Ray McDermott, SA announced it received tenders from holders of all of its $200 million of 11% senior secured notes due 2013 as of the 5 p.m. ET on May 16 consent deadline.

The company also set pricing; for each $1,000 principal amount of the notes, McDermott will pay $1,187.19, a price based on a fixed spread of 50 basis points over the yield on the 3 3/8% U.S. Treasury note due Dec. 15, 2008.

Pricing was fixed at 10 a.m. ET on May 17.

The total includes a consent payment of $30 per $1,000 principal amount for holders who tendered by the consent deadline.

J. Ray McDermott will also pay accrued interest up to but excluding the settlement date.

The consent solicitation is to amend the note indenture to eliminate or modify most of the restrictive covenants and some other provisions and to authorize amendments to the collateral documents that provide security for the notes to allow the company and its subsidiaries to grant second-priority liens on the collateral.

The tender expires at 5 p.m. ET on June 1.

If all the notes are tendered, J. Ray McDermott expects to incur $50 million of expense for early retirement of the notes and other transaction costs. It will use $250 million of cash on hand to pay for the tender.

The offer is subject to conditions including the receipt of consents from holders of two thirds of the notes and completion of a senior secured credit facility of up to $500 million.

Credit Suisse Securities (USA) LLC is dealer manager and solicitation agent (800 820-1653 or call collect at 212 538-065). Morrow & Co., Inc. is information agent at (800 607-0088). The Bank of New York is depositary.

J. Ray McDermott is a subsidiary of Houston-based energy services company McDermott International, Inc. It began the offer on May 3.

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