MDR McDermott International Inc

J. Ray McDermott, S.A. ("J. Ray"), a subsidiary of McDermott International, Inc. ("McDermott") (NYSE:MDR), announced today that it has commenced a cash tender offer and consent solicitation (collectively, the "Offer") to purchase all of J. Ray's outstanding 11% Senior Secured Notes due 2013 (the "Notes"), with an aggregate principal amount of $200 million outstanding. The Offer will expire at 5:00 p.m., New York City time, on June 1, 2006, unless extended (the "Expiration Date"). In connection with the tender offer, J. Ray is soliciting consents from holders of the Notes to (i) amend the indenture governing the Notes to eliminate or modify most of the restrictive covenants and certain other provisions of the Notes and the indenture and (ii) authorize amendments to collateral documents that provide security for the Notes, in order to allow J. Ray and its subsidiaries to grant second-priority liens on the collateral. The total consideration for each $1,000 principal amount of the Notes validly tendered and accepted for payment by J. Ray pursuant to the tender offer will be based upon a fixed spread of 50 basis points over the yield on the 3.375% U.S. Treasury Note due December 15, 2008, to be calculated by the Dealer Manager in accordance with standard market practice on May 17, 2006. The total consideration includes a consent payment of $30 per $1,000 principal amount of Notes validly tendered and accepted for payment by J. Ray prior to a consent payment deadline (the "Consent Date"), which is expected to be 5:00 p.m., New York City time, on May 16, 2006. Holders who tender Notes after the Consent Date will not receive the consent payment. Holders cannot tender their Notes without delivering their consent and cannot deliver their consent without tendering their Notes. In addition, J. Ray will pay accrued and unpaid interest up to, but not including, the settlement date, which will be promptly following the Expiration Date. Assuming all Notes are properly tendered and accepted, J. Ray anticipates it will recognize approximately $50 million of expense from the early retirement of the Notes and other transaction costs, and will use approximately $250 million of its cash on hand to fund the Offer. The Offer is subject to the satisfaction of certain conditions, including, among other things, the receipt of consents from holders of at least two-thirds of the principal amount of the Notes and completion of a proposed senior secured credit facility of up to $500 million. All terms and conditions of the Offer are set forth in J. Ray's Offer to Purchase and Consent Solicitation Statement dated May 3, 2006 (the "Statement") and the related Letter of Transmittal and Consent. Subject to applicable law, J. Ray may, at its sole discretion, waive any condition applicable to the Offer or extend, terminate or otherwise amend the Offer. Neither Notes tendered pursuant to the Offer nor the related consents may be withdrawn or revoked unless the Offer is not consummated, except to the extent required by applicable law. Credit Suisse Securities (USA) LLC will act as Dealer Manager and Solicitation Agent, Morrow & Company, Inc. will serve as Information Agent and The Bank of New York will act as Depositary in connection with the Offer. Questions regarding the Offer may be directed toll-free to the Dealer Manager at (800) 820-1653 or collect at (212) 538-0652. Requests for documentation may be directed toll-free to the Information Agent at (800) 607-0088. This announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of an offer to sell securities, with respect to any of the Notes. The Offer is being made solely pursuant to the terms of the Statement and related Letter of Transmittal and Consent. Each Noteholder should read the Statement and accompanying documents, as they contain important information. None of the companies referenced herein, including J. Ray McDermott or any of the agents, make any recommendation in connection with the Offer. J. Ray McDermott is a leading provider of engineering, procurement, construction, and installation services for offshore oil and gas field developments worldwide. McDermott International, Inc. is a leading worldwide energy services company. McDermott's subsidiaries provide engineering, construction, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this press release, which are forward-looking and provide other than historical information, involve risks and uncertainties that may impact actual outcomes. These forward-looking statements include our statements regarding the costs, terms, conditions and schedule of the Offer. Those statements are subject to numerous uncertainties and risks including, without limitation, that the Offer may not be consummated on the terms described herein or that Notes tendered pursuant to the Offer may not be accepted for payment. For a more complete discussion of these risk factors, please see McDermott's annual report for the year ended December 31, 2005 filed with the Securities and Exchange Commission.