Valaris skips more interest payments, amends waiver and forbearance

By Wendy Van Sickle

Columbus, Ohio, Aug. 3 – Valaris plc amended its credit agreement waiver and its note forbearance agreement, both dated July 15, according to an 8-K filing with the Securities and Exchange Commission.

Credit agreement waiver

The initial waiver was entered into under the company’s fourth amended and restated credit agreement dated May 7, 2013 to waive any resulting default or event of default attributed to any failure by the company or any of its subsidiaries to make their required interest payments due June 1 with respect to the company’s 4 7/8% senior notes due 2022 and its 5.4% senior notes due 2042 and on June 15 with for its 7 3/8% senior notes due 2025.

As previously disclosed, the waiver was entered into to continue to waive any default or event of default in respect of the June interest payments as well as to also waive any default or event of default under the revolver resulting from any cross-defaults under the 2022, 2042 and 2025 notes, the 4¾% senior notes due 2024 and the 5.85% senior notes due 2044 in respect of the failure to pay the June 1 interest payments.

A second waiver was entered to continue to waive any default or event of default in respect of the June interest payments and the June 1 cross-defaults, as well as to also waive any default or event of default under the revolver resulting from any failure by the company to make all or any part of its required interest payments due on July 15 on the 2024 notes and 2044 notes; on July 31 on the 8% senior notes due 2024 and with respect to one of the company’s subsidiaries, its 3% exchangeable notes due 2024; and on Aug. 1 with respect to the company’s 7¾% senior notes due 2026, cross-defaults under the defaulted notes in respect of the June 15 interest payments and an additional waiver relating to a vendor payment.

The third waiver continues to waive any default or event of default as a result of the failure to make the June interest payments; the June 1 cross-defaults; the failure to make the July interest payments; the failure to make the Aug. 1 interest payments; the June 15 cross-defaults; and the failure to make the missed vendor payment.

Additionally, the third waiver waives any default or event of default under the revolver attributed to any failure by the company or any of its subsidiaries to make all or any part of their required interest payments due on Aug. 15 with respect to one of the company’s subsidiaries’ 7 7/8% senior notes due 2040 and 6 7/8% senior notes due 2020; failure by the company or any of its subsidiaries to make all or any part of their required principal payment due on Aug. 15 with respect to the subsidiaries’ 2020 notes; and resulting from any cross-defaults under the defaulted notes in respect of the failure to pay the July 15 interest payments.

The third waiver will remain in effect until the earliest of Aug. 15; termination or invalidity of the note forbearance agreement; the forbearance agreement ceasing to be in full force and effect or amendment of the forbearance agreement without consent of the requisite number of revolver lenders; acceleration of the defaulted notes; or the date on which advances under the revolver exceed $630 million.

Noteholder forbearance

On Aug. 3, the company amended its forbearance agreement dated July 15, 2020 with respect to the 2022 notes, the 2024 notes, the 2025 notes, the 2042 notes and the 2044 notes.

Under the amended forbearance agreement, the supporting holders have agreed to forbear from the exercise of some rights and remedies that they have under the indentures with respect to certain specified defaults and events of defaults, including cross-defaults as a result of an acceleration.

In the event that the applicable trustee or any holder or group of holders takes any action which results in an acceleration during the forbearance period to deliver written notice to the applicable trustee to rescind such acceleration and its consequences and take all other action in their power to cause such acceleration to be rescinded and annulled.

The company and the supporting holders agreed to continue this forbearance until the earlier of Aug. 15; the occurrence of any other default or event of default under the indentures that is not cured within any applicable grace period; the acceleration of the company’s obligations under the revolver; the termination or invalidity of the third waiver; the commencement of a case under title 11 of the United States code or any similar reorganization, liquidation, insolvency or receivership proceeding by or against the company or a subsidiary of the company; or failure of the company to timely comply with any term, condition or covenant.

Valaris elected not to make the $12.7 million interest payment due on July 31 with respect to Ensco Jersey Finance Ltd.’s 3% exchangeable senior notes due 2024 and the roughly $11.7 million interest payment due on July 31 on its 8% senior notes due 2024.

Additionally, the company elected not to make the roughly $38.8 million interest payment due and payable on Aug. 1 on its 7¾% senior notes due 2026.

The company has a 30-day grace period to make the interest payments before such non-payment constitutes an event of default with respect to the notes, as applicable. The company has elected to enter into the 30-day grace period, which expires on Aug. 31 on the exchangeable notes and the 2024 notes and Sept. 1 on the 2026 notes.

As of July 31, Valaris had about $224.5 million in cash, in addition to available borrowing capacity under its revolver.

The company continues to have discussions with its lenders and bondholders regarding the terms of a potential comprehensive restructuring of its debt.

Valaris is a London-based offshore drilling company.

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