Valaris files for bankruptcy

Aug. 19, 2020
Valaris is the third offshore drilling contractor to file for bankruptcy this year.

Offshore staff

LONDONValaris plc has entered into a binding restructuring support agreement (RSA) and backstop commitment agreement (BCA) with about 50% of its noteholders.

The company will undergo a financial restructuring that it said is intended to reduce its debt load substantially, support continued operations during the current lower demand environment, and provide a robust financial platform to take advantage of market recovery over the long term.

The RSA and the BCA contemplate, among other items, the full equitization of its pre-petition revolving credit facility and unsecured notes, a fully backstopped rights offering to noteholders for $500 million of new secured notes, the effective cancellation of existing equity interests in the company in exchange for, in certain circumstances, warrants for post-emergence equity and payment of trade claims in full in cash.

To implement the terms of the RSA and the BCA, Valaris has voluntarily filed for a Chapter 11 financial restructuring in the United States Bankruptcy Court for the Southern District of Texas.

The company said it has about $175 million in cash and has received debtor-in possession financing of $500 million to support its operations throughout the Chapter 11 process.

Tom Burke, president and CEO of Valaris, said: “The substantial downturn in the energy sector, exacerbated by the COVID-19 pandemic, requires that we take this step to create a stronger company able to adapt to the prolonged contraction in the industry, and to continue to enhance our position as overall market conditions improve.

“We have taken several steps to right-size and streamline our organization in line with our goal to be the offshore drilling cost leader. Now, we intend to use this restructuring to complement these measures to create a stronger financial structure for the company...”

Valaris is the third major offshore drilling contractor to file for bankruptcy this year, following Noble Corp. in July and Diamond Offshore Drilling in April.