Valaris skips July 15 interest payments, inks waiver and forbearance

By Caroline Salls

Pittsburgh, July 15 – Valaris plc elected not to make the $7.6 million interest payment due July 15 on its 4¾% senior notes due 2024 and the $11.7 million interest payment due July 15 on its 5.85% senior notes due 2044, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

Under the indentures governing the notes, Valaris has 30 days to make the interest payments before non-payment constitutes an event of default on the notes.

The company said it has elected to enter into the grace period, which expires on Aug. 15. As of Tuesday, Valaris had $215 million in cash, in addition to available borrowing capacity under its revolving credit facility.

Valaris said it continues to have discussions with its lenders and bondholders regarding the terms of a potential comprehensive restructuring of its debt.

According to the 8-K, the company and its credit agreement lenders entered into a waiver to the credit agreement that restates and replaces a waiver entered on June 30.

The initial waiver, which was entered on June 1, waived any default resulting from the company’s failure to make required interest payments due June 1 on its 4 7/8% senior notes due 2022 and 5.4% senior notes due 2042, as well as payments due June 15 on Valaris’s 7 3/8% senior notes due 2025.

The waiver also covers any revolving credit facility default resulting from cross defaults related to the missed notes payments.

The latest waiver also waives any default under the facility related to the failure to make the interest payments due July 15 and payments due on July 31 on the company’s 8% senior notes due 2024 and a subsidiary’s 3% exchangeable notes due 2024, as well as a payment due Aug. 1 on Valaris’s 7¾% senior notes due 2025.

The waiver announced Wednesday also applies to cross-defaults on the company’s Rowan notes related to the June 15 interest payments and an additional waiver related to a vendor payment.

The waiver will remain in effect until the earliest of Aug. 3, the termination or invalidity of the forbearance agreement, acceleration of the Rowan notes and the date on which the amount of advances outstanding under the revolver exceeds $630 million.

Also on Wednesday, Valaris entered into a forbearance agreement in connection with the indenture under which the Rowan notes were issued.

Under that forbearance agreement, the supporting noteholders have agreed not to exercise their default-related rights until the earliest of Aug. 3, the occurrence of any other default under the indentures that is not cured within the grace period, the acceleration of the revolver obligations, the termination of the waiver agreement, the filing of a Chapter 11 case or other insolvency proceeding by Valaris or its subsidiaries and the failure by the company to comply with the forbearance agreement terms or covenants.

Valaris is a London-based offshore drilling company.

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