HOUSTON (AFX) - Energy services company McDermott International Inc. on Wednesday said it will take a $5 million charge in the fourth quarter related to a final asbestos-related settlement at its Babcock & Wilson subsidiary. The company also said it plans to consolidate its U.S. operations.
The company said it used cash on hand and term loans from Babcock & Wilson's credit facility to pay a $355 million contingent payment right and retire a $250 million promissory note to resolve the asbestos-related issues. Since the company made the payment ahead of time, it expects to receive a cash tax refund of about $250 million in late 2007 or early 2008.
In other news, McDermott International intends to combine its two U.S. operating groups, McDermott Inc., which is the indirect parent company of Babcock & Wilson and BWX Technologies Inc., and J. Ray McDermott Holdings LLC, which is the holding company of J. Ray McDermott SA's U.S. operations.
The company said the reorganization will return McDermott International to a more tax-efficient U.S. legal structure now that the Babcock & Wilson asbestos issues have been resolved. The combination is scheduled for completion by the end of the year.
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