Shearman & Sterling represented Citibank, N.A., in its capacity as administrative agent and lender under a revolving credit agreement (the “RCF”) in connection with Valaris plc and certain of its subsidiaries’ chapter 11 bankruptcy cases.
On March 3, 2021, the Valaris Group’s Plan of Reorganization was approved and confirmed by the United States Bankruptcy Court for the Southern District of Texas. Valaris 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 maturing in 2028.
Valaris operates the largest international offshore drilling business in the world and employs a fleet of 74 rigs. Valaris filed for Chapter 11 on August 19, 2020, with approximately $580 million outstanding under the RCF, having signed a restructuring support agreement with an ad hoc group of bondholders (“RSA”) which initially contemplated an all-equity recovery for the RCF lenders.
At the outset of the cases, Shearman & Sterling actively objected to the initial RSA among the Debtors and the ad hoc group of bondholders, which initially sought to equitize the RCF lenders claims in full. Shearman & Sterling ultimately helped the RCF Lenders to reach a global settlement with the Debtors and the bondholders where the RCF lenders received significant cash recovery on account of their claims, and the option to participate in the exit financing. The restructuring was subject to a range of complex conditions to completion (including antitrust approvals in several jurisdictions). A key aspect of implementation involved an English law pre-packaged administration sale of the business and assets of Valaris plc to a newly-incorporated Bermudan company, controlled by Valaris’ existing financial creditors, on 30 April 2021. The common stock and warrants of the new parent company commenced trading on the NYSE on 3 May 2021.
As of April 30, 2021, Valaris had $615 million of available cash, $40 million of restricted cash, and $550 million of debt.