Valaris plc Announces Amended Restructuring Support Agreement and Backstop Commitment Agreement

Rhea-AI Summary

Valaris plc (OTC: VALPQ) announced significant updates regarding its restructuring efforts. On February 5, 2021, it entered a second amendment to the Restructuring Support Agreement to include Bank Lenders as parties. The company will allow Bank Lenders to receive distributions in cash and new equity. Under the Rights Offering, approximately 97.6% of rights will be available to holders of Senior Notes, and 30% of new equity will be allocated to participating holders. The agreement aims to strengthen the company’s capital structure amid Chapter 11 proceedings.

Positive

• Second amendment to restructuring agreement includes Bank Lenders, enhancing support.
• Rights Offering allocates significant new equity to participants, promoting stakeholder involvement.

Negative

• Ongoing Chapter 11 proceedings may create uncertainty for shareholders.
• Dependence on lenders' participation could indicate potential liquidity challenges.

LONDON, Feb. 8, 2021 /PRNewswire/ -- Valaris plc (OTC: VALPQ) ("Valaris" or, together with certain of its affiliates, the "Company") today announced that, on February 5, 2021, the Company, certain holders ("Noteholders") of the Company's outstanding unsecured notes (the "Senior Notes") and certain bank lenders ("Bank Lenders") under the Company's revolving credit facility (the "Credit Facility") entered into a second amendment to the Restructuring Support Agreement (the "RSA" and such amendment, the "Second RSA Amendment") and Backstop Commitment Agreement ("BCA") to effectuate certain modifications to include the Bank Lenders as parties to the RSA and BCA. The treatment for the Company's employees and holders of General Unsecured Claims remains unchanged.

"We are pleased to have reached these agreements with certain of our noteholders and lenders, as it is an important step in the chapter 11 process. This agreement brings us a step closer to creating a capital structure to endure the current market environment and enhance our position as business conditions improve," said Tom Burke, President and Chief Executive Officer of Valaris. "We remain focused on emerging expeditiously, with a strengthened balance sheet to continue supporting our valued customers, vendors, and outstanding team of employees."

Under the terms of the Second RSA Amendment, among other things, the Bank Lenders will receive their chapter 11 distributions in either i) a combination of cash, new ordinary shares (the "New Equity") of the new parent entity of the Company ("New Valaris") and the right to participate in the rights offering (the "Rights Offering") contemplated by the RSA or, ii) entirely in cash and New Equity of the New Valaris, at their election. 

As part of the Rights Offering, 97.6% of the rights issued pursuant to the Rights Offering (the "Subscription Rights") will be offered to all record holders of any claim on account of the Senior Notes, and 2.4% of the Subscription Rights will be offered to certain record holders of Credit Facility Claims (in accordance with and as defined in the RSA). Additionally, under the Second RSA Amendment, each holder that participates in the Rights Offering and Holdback (as defined in the RSA) will receive its pro-rata share of 30% of the New Equity. New Valaris will also 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 (as defined in the RSA). Finally, all letters of credit outstanding under the Fourth Amended and Restated Credit Agreement, dated as of May 7, 2013, among Valaris and Pride International, Inc. as borrowers, and the Bank Lenders party thereto, (the "Credit Facility") will be replaced or collateralized with cash.

In addition to supporting the Plan and Second Amended RSA, certain Bank Lenders also agreed to backstop a portion of the Rights Offering. On February 5, 2021, the Company entered into an amendment to the Backstop Commitment Agreement, dated August 18, 2020, which was previously amended on September 10, 2020, and January 22, 2021 (as amended, the "Backstop Commitment Agreement") with certain of the Noteholders and Bank Lenders (such amendment, the "Backstop Commitment Agreement Amendment"). The Backstop Commitment Agreement Amendment provides that the participating Bank Lenders will receive, among other things, 2.4% of the Holdback Notes (together with the corresponding Holdback Shares) and the New Secured Notes (together with the corresponding Participation Equity) offered in the Rights Offering (in each case, as each such term is defined in the Backstop Agreement).

Court filings and other information related to the Court-supervised proceedings are available at a website administered by the Company's claims agent, Stretto, http://cases.stretto.com/Valaris.  Questions should be directed to our dedicated restructuring hotline 855-348-2032 (Toll-Free) or +1 949-266-6309 (International).

About Valaris plc

Valaris plc (OTC: VALPQ) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris plc is an English limited company (England No. 7023598). To learn more, visit our website at www.valaris.com.

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SOURCE Valaris plc

FAQ

What is the recent restructuring announcement from Valaris (VALPQ)?

Valaris announced a second amendment to the Restructuring Support Agreement on February 5, 2021, which includes Bank Lenders.

How will the Rights Offering affect Valaris (VALPQ) shareholders?

Under the Rights Offering, 97.6% of rights will be offered to Senior Notes holders, allowing them to receive new equity.

What is the role of Bank Lenders in Valaris's (VALPQ) restructuring?

Bank Lenders are included in the amended restructuring agreement, giving them a stake in the new equity and distributions.

What percentage of new equity will be allocated to Rights Offering participants for Valaris (VALPQ)?

Rights Offering participants will collectively receive 30% of the new equity.

How does the restructuring affect Valaris's (VALPQ) financial stability?

The restructuring aims to strengthen Valaris's capital structure amid its Chapter 11 proceedings.