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December 7, 2020 – The Debtors filed with the Court a motion to extend the periods during which the Company has an exclusive right to file a Plan and solicit acceptances thereof, through and including April 16, 2021 and June 15, 2021, respectively [Docket No. 757]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on December 17, 2020 and February 15, 2021, respectively.
In the extension motion, the Debtors touted the progress made to date, including entering a restructuring support agreement and filing a Plan of Reorganization on October 15, 2020, with a goal of emerging from bankruptcy "in early 2021." In addition, the Debtors and advisor Lazard Frères & Co. LLC have been in settlement negotiations with revolving credit facility lenders. However, those talks are still ongoing, with the latest revised proposal being submitted by Lazard on December 7, 2020.
With the hearing on approval of the adequacy of the Disclosure Statement accompanying the Plan and Plan voting solicitation procedures scheduled for December 17, the Debtors said the requested extension will give them more time to solicit plan votes and build further consensus on the Plan.
The extension motion explains, “Before the Petition Date, following months of intensive negotiations, the Debtors entered into a Restructuring Support Agreement (the ‘Restructuring Support Agreement’) that provides for a value-maximizing restructuring transaction. The Restructuring Support Agreement sets forth the terms of a transaction that would fully equitize the Debtors’ $7.1 billion of prepetition funded debt, provide a $500 million fully-funded exit facility and set the Debtors on a path to emerge from bankruptcy in early 2021. Since the Petition Date, the Debtors have continued to build consensus for the deal reflected in the Restructuring Support Agreement, resulting in holders of an additional $1.5 billion of bond debt supporting the Debtors’ restructuring efforts, amounting to a total of 72 percent of bonds having committed to supporting the Plan.
In the approximately three months since the Petition Date, the Debtors and their advisors have made substantial progress toward achieving their goals. The Debtors smoothly transitioned into chapter 11 and stabilized their business operations, obtained Court approval of important procedural and operational relief (including $500 million of debtor-in-possession financing), rejected burdensome leases of nonresidential real property, filed their schedules and statements of financial affairs and, on October 15, 2020, filed a proposed chapter 11 plan of reorganization (the ‘Plan’) and accompanying disclosure statement (the ‘Disclosure Statement’).
The Debtors and Lazard Frères & Co. LLC (‘Lazard’) have also been working to broker a settlement with the RCF Lenders. To that end, in the week following the Court’s approval of the debtor-in-possession financing facility on September 25, Lazard arranged calls with the advisors to the RCF Agent, the Ad Hoc Group, and the Creditors Committee to discuss the proposed approach to the settlement process. After those calls, in the following week Lazard held individual interviews with six RCF Lenders and four members of the Ad Hoc Group to determine their views about potential settlement structures. Coming out of those meetings, Lazard worked with the Debtors to develop a restructuring framework that could potentially be acceptable to both the RCF Lenders and the Ad Hoc Group. During this period, Lazard worked to finalize the valuation analysis and assisted the Company with preparing the financial projections. The valuation and projections — key gating items to substantive settlement negotiations — were filed on October 27. The Debtors then worked to arrange for the Ad Hoc Group to become ‘re-restricted’ by signing back up to nondisclosure agreements with a fixed ‘cleansing date.’ After nine bondholders signed nondisclosure agreements on November 13, Lazard held calls with the RCF Lender group on the same day and with the Ad Hoc Group on November 16. Lazard then submitted a proposal to the RCF Agent, the Ad Hoc Group, the Creditors Committee and the Debtors on November 20. The RCF Agent and the Ad Hoc Group submitted counterproposals on November 25. Lazard held multiple calls with the parties involved and, based on the feedback gleaned from those conversations, submitted a revised proposal to the RCF Agent, the Ad Hoc Group, the Creditors Committee and the Debtors on December 7, 2020. Lazard remains in ongoing discussions with these parties in an effort to reach a settlement.
Notwithstanding the substantial progress made to date, certain tasks remain before the Debtors may emerge from chapter 11. Most pressingly, the Debtors’ Disclosure Statement hearing is currently scheduled for December 17, and solicitation must occur thereafter. Simultaneously, the Debtors and their key stakeholders continue to negotiate critical documents required for plan confirmation and emergence, including key settlement, financing and corporate governance documents. As tasked by the Court at the hearing approving the debtor-in-possession financing facility, the Debtors and their key stakeholders are working constructively to narrow open issues and arrive at consensual resolutions in advance of ultimately seeking Court approval at confirmation. The Debtors will continue their efforts to build consensus surrounding the Plan for the benefit of all stakeholders in these chapter 11 cases."
The hearing on the motion is scheduled for January 11, 2021.
About the Debtors
According to the Debtors: “Valaris plc (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. With an unwavering commitment to safety and operational excellence, and a focus on technology and innovation, Valaris was rated first in total customer satisfaction in the latest independent survey by EnergyPoint Research – the ninth consecutive year that the Company has earned this distinction. Valaris plc is an English limited company (England No. 7023598) with its corporate headquarters located at 110 Cannon Street, London EC4N 6EU.”
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