McDermott International says that its Board of Directors has approved the spin-off of its power generation systems and government operations segments through the distribution of shares of The Babcock & Wilcox Company (B&W), to holders of McDermott common stock.

The distribution of B&W common stock is expected to occur on July 30, 2010, with McDermott stockholders receiving one share of B&W common stock for every two shares of McDermott common stock held at the close of business on July 9, 2010. Fractional shares of B&W common stock will not be distributed, and any fractional share of B&W common stock otherwise issuable to a McDermott stockholder will be sold in the open market on such stockholder's behalf, and such stockholder will receive a cash payment with respect to such fractional share.

Following the distribution of the B&W common stock in the spin-off, B&W will be a separate, publicly traded company, and McDermott will not retain any ownership interest in B&W. The shares of B&W common stock will be listed on the New York Stock Exchange under the symbol "BWC."

The completion of the distribution is subject to: the Securities and Exchange Commission (SEC) having declared effective B&W's Registration Statement on Form 10, as amended ("Form 10"), and other conditions described in the information statement included as an exhibit to the Form 10.

McDermott has received a private letter ruling from the Internal Revenue Service to the effect that, based on certain facts, assumptions, representations and undertakings set forth in the ruling, for U.S. federal income tax purposes, the distribution of B&W common stock and certain related transactions will not be taxable to McDermott or U.S. holders of McDermott common stock, except in respect of cash received in lieu of fractional share interests, which generally will be taxable to such holders as capital gain.

"We have made great progress over the past six months, and I am very pleased to now be reaching this important point in the process of completing the B&W spin-off," said John A. Fees, Chief Executive Officer of McDermott. "As we outlined in December, we believe the spin-off will provide important benefits to our stockholders. We believe that as separate, independent, publicly traded entities, B&W and the remaining McDermott will benefit from enhanced management focus, more efficient capital allocation and greater operational and strategic flexibility. We also believe that the spin-off will help preserve B&W's ability to contract with the U.S. Government. I am proud of the shared accomplishments of McDermott and B&W as a combined group of companies, and I look forward to their future, independent successes as they each continue to remain focused on the best, long-term interests of their customers and stockholders. I also want to extend my sincere appreciation to all of our employees whose tireless efforts and commitment have made the spin-off possible."

Tags: McDermott International