Offshore drilling contractor Valaris PLC filed for chapter 11 bankruptcy on Aug. 19 in the U.S. Bankruptcy Court for the Southern District of Texas as its ability to repay its debt was hampered by a sharp slowdown in business after the coronavirus pandemic forced customers to slash activity, SPGlobal.com reported. The bankruptcy allows Valaris to implement a binding restructuring support agreement and backstop commitment agreement the company entered into with about half of its noteholders. The agreements were designed to decrease the company's debt by more than $6.5 billion and support its continued operations amid the current weak market environment. The deals included the full equitization of Valaris' pre-petition revolving credit facility and unsecured notes, a fully backstopped rights offering to noteholders for $500 million of new secured notes, and the removal of existing equity interests in the company for warrants and payment of trade claims. Weeks ahead of the bankruptcy filing, Valaris filed a Form 10-Q with the SEC in which it warned it could file for bankruptcy soon to deal with debt totaling about $7 billion. The company said it recently missed $58.5 million in interest payments on a total of $2.1 billion in bonds. It also said there is "substantial uncertainty" over whether it would meet a $79.2 million interest payment in mid-August, along with $122.9 million outstanding principal on a portion of bonds also coming due.
