J. Ray McDermott ends HeereMac joint venture

Dec 19, 1997 01:00 AM

McDermott International, Inc. and J. Ray McDermott, SA have announced that J. Ray McDermott has terminated the HeereMac joint venture, with effect from Dec. 19, 1997. Under an agreement between J. Ray McDermott and its partner, Heerema Offshore Construction Group Inc., Heerema assumed J. Ray McDermott's 50 % interest in the joint venture in exchange for $ 318.5 mm in cash and title to several pieces of equipment. The equipment transferred to J. Ray McDermott includes launch barges and the DB-101, a 3,500-ton capacity, semi-submersible derrick barge. The equipment will be available in the spring of 1998, upon completion of contracts in progress.
"We are very pleased with this agreement,'' said Roger Tetrault, chairman of the board and chief executive officer of the companies. "The assets and the significant amount of cash we receive will be of value to us as we continue to rationalise and modify our offshore fleet to become the high-tech, low-cost Company in traditional marine construction markets as well as in the emerging deepwater and sub-sea markets.''
HeereMac was formed in 1989 as a 50/50 joint venture between subsidiaries of McDermott International, Inc. and Heerema Offshore Construction Group Inc. The interest held by McDermott International was later assumed by a subsidiary of J. Ray McDermott. The venture was formed to provide heavy-lift offshore marine construction services to the petroleum industry on a world-wide basis, especially in harsh environments. The equipment operated by the joint venture included the DB-101 and three other heavy-lift, semi-submersible derrick barges, the DB-102, the Balder and the Hermod, which were received by Heerema in the agreement terminating the joint venture.
Tetrault said J. Ray McDermott and McDermott International continue to cooperate with a federal grand jury which has subpoenaed documents relating principally to an investigation of possible anti-competitive activity in the heavy-lift barge service business of J. Ray McDermott and HeereMac. J. Ray McDermott and McDermott International are also co-operating with the Securities and Exchange Commission, which has requested the voluntary production of documents relating, in part, to HeereMac, and are continuing their own internal investigation into allegations of wrongdoing by a limited number of former employees.
The grand jury proceedings and the allegations could result in civil and/or criminal liability for McDermott International and J. Ray McDermott.

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