McDermott Board Approves Babcock &Wilcox Spinoff

McDermott International 's Board of Directors 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, which B&W has filed with the SEC and is available at the SEC’s website at

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.”

No action is required by McDermott stockholders in order to receive shares of B&W common stock in the spin-off distribution, and McDermott stockholders should retain their McDermott stock certificates. McDermott stockholders entitled to receive the dividend will receive a book-entry account statement reflecting their ownership of shares of B&W common stock or their brokerage account will be credited for the shares.

McDermott expects that a “when-issued” public market for B&W common stock will commence shortly after the July 9, 2010 record date and will continue through the distribution date. McDermott also anticipates that “regular-way” trading of B&W’s common stock will begin on August 2, 2010, the first trading day following the distribution date.

In addition, shortly after the July 9, 2010 record date, it is expected that shares of McDermott common stock will begin trading two ways – either with or without the distribution of the shares of B&W. McDermott stockholders who sell their shares of McDermott common stock in the “regular-way” market (i.e., the normal trading market on the NYSE under the symbol “MDR”) after the record date and on or prior to the distribution date will be selling their right to receive shares of B&W common stock in connection with the spin-off. It is anticipated that shares of McDermott common stock will also trade “ex-distribution” (that is, without the right to receive the B&W distribution) during that period under the symbol “MDRwi.” Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling shares of McDermott common stock on or before the distribution date.

McDermott expects to mail the information statement to all stockholders entitled to receive the distribution of shares of B&W common stock on or about July 21, 2010. The information statement will describe B&W, the various risks involved, including the risks of holding B&W common stock, and other details of the transaction, including additional details regarding the spin-off.