Houlihan Lokey Advises Valaris Noteholders

Houlihan Lokey is pleased to announce the successful restructuring of Valaris plc through a Chapter 11 bankruptcy proceeding. Houlihan Lokey represented an ad hoc group of noteholders (Ad Hoc Group) holding more than $4.0 billion of the company’s $6.5 billion unsecured bonds (Senior Notes) through the restructuring process. The transaction reduced the company’s debt from approximately $7.1 billion to $550 million. Houlihan Lokey structured and priced $550 million of new debt and associated equity, which was backstopped by the Ad Hoc Group.

Valaris is a leading offshore drilling contractor operating a global fleet of 60 rigs, including 11 drillships, five semisubmersibles, 44 jackups, and a 50% equity interest in ARO Drilling, a 50/50 joint venture with Saudi Aramco, which owns an additional seven rigs. Faced with severe and prolonged headwinds in the oil and gas industry as well as the significant disruption caused by the COVID-19 pandemic, Valaris filed for Chapter 11 bankruptcy in August 2020 in order to right-size its balance sheet through a comprehensive equitization of its existing capital structure.

Houlihan Lokey led negotiations on behalf of the Ad Hoc Group with multiple stakeholders that culminated in an uncontested confirmation hearing. After resolving a complex internoteholder dispute and litigation brought by legacy Rowan bondholders, the Ad Hoc Group entered into a restructuring support agreement (RSA) with Valaris prior to its Chapter 11 filing and provided a $500 million debtor in possession (DIP) financing commitment. After extensive negotiations with the RCF lenders throughout the bankruptcy proceedings, a final settlement was reached that provided the RCF lenders consideration in the form of equity, cash, and the option to participate in the rights offering and backstop of the exit first lien notes. The plan was confirmed on March 3, 2021, with overwhelming support from Valaris’ stakeholders (including prepetition creditors, shareholders, and key vendors), and the company emerged from Chapter 11 on April 30, 2021.