• Company Expected to Emerge with Robust Financial Foundation via Equitization of $7.0 Billion of Prepetition Debt, Which Represents 99% of Debt Outstanding, and a $520 Million Capital Injection
• Agreement Reached with Credit Facility Bank Lenders and Unsecured Noteholders to Sign an Amended Restructuring Support Agreement and Backstop Commitment Agreement
• Noteholders Representing Over 72% of the Company’s Unsecured Notes and Bank Lenders Representing Over 88% of the Company’s Credit Facility Claims Have Signed on to Support the Restructuring

Valaris today announced that, on February 5, 2021, the Company, certain holders of the Company’s outstanding unsecured notes and certain bank lenders under the Company’s revolving 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 prorata 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).

KeyFacts Energy Industry Directory: Valaris