Valaris completes restructuring, emerges with $7.1 billion less debt

By Sarah Lizee

Olympia, Wash., May 3 – Valaris Ltd., the new parent company of the Valaris group, completed its financial restructuring and emerged from Chapter 11 on Friday, according to a press release.

The company’s plan of reorganization was approved and confirmed by the U.S. Bankruptcy Court for the Southern District of Texas on March 3, as previously reported.

Valaris said it now moves forward with a strengthened capital structure, eliminating $7.1 billion of debt and securing a $520 million capital injection by issuing $550 million of new secured notes due 2028. The notes include the option of an 8¼% cash coupon, 10¼% half cash, half paid-in-kind coupon or 12% PIK coupon, all at the company’s election.

As of April 30, Valaris had $615 million of available cash, $40 million of restricted cash and $550 million of debt.

The common stock and warrants of the new parent company were set to start trading on the New York Stock Exchange under the ticker symbols “VAL” and “VAL WS,” respectively, at market open on Monday.

Shares of Valaris plc, the former U.K. parent company, stopped trading on the OTC Pink Marketplace as of April 28.

Valaris also announced the appointment of a new seven-member board of directors, including Elizabeth Leykum, who has been appointed chair of the board, Anton Dibowitz, who joins the board on July 1, Dick Fagerstal, Joseph Goldschmid, Deepak Munganahalli, Jay Swent and Thomas Burke, who remains president and chief executive officer.

Under the plan, holders of general unsecured claims were to receive payment in full or have their claims reinstated.

The bank lenders were to receive their Chapter 11 distributions in either a combination of cash, new ordinary shares of the new parent entity of the company and the right to participate in the rights offering contemplated by the restructuring agreement or entirely in cash and new equity of new Valaris, at their election.

As part of the rights offering, 97.6% of the rights issued was to be offered to all record holders of any claim on account of the senior notes, and 2.4% of the subscription rights was to be offered to some record holders of credit facility claims.

Additionally, each holder participating in the rights offering and holdback was to receive its pro rata share of 30% of the new equity.

New Valaris was to issue 39% of the new equity to holders of the senior notes and 28.3% of the new equity to holders of claims against Valaris with respect to the credit facility claims.

Finally, all letters of credit outstanding under the fourth amended and restated credit agreement dated as of May 7, 2013 were to be replaced or collateralized with cash.

In addition to supporting the plan and second amended restructuring support agreement, some bank lenders also agreed to backstop a portion of the rights offering.

The backstop commitment agreement amendment provided that the participating bank lenders were to receive, among other things, 2.4% of the holdback notes and the new secured notes offered in the rights offering.

Kirkland & Ellis LLP and Slaughter and May served as legal advisers to Valaris in connection with the restructuring. Lazard Ltd. served as Valaris' investment banker and Alvarez & Marsal North America LLC as its restructuring adviser. Kramer Levin Naftalis & Frankel LLP and Akin Gump Strauss Hauer & Feld LLP served as legal advisers to the consenting noteholders, and Houlihan Lokey Inc. served as financial adviser. Shearman & Sterling LLP served as legal advisers to the revolver administrative agent, and Perella Weinberg Partners LP served as financial adviser.

Valaris is a London-based offshore drilling company. The company filed bankruptcy on Aug. 19, 2020 under Chapter 11 case number 20-34114.

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