Dealwatch: Elite companies delve into restructuring Valaris worth $ 7.1 billion as eclectic deals epitomize the market
In one so-called “exceptional case,” Valaris’ $ 7 billion financial restructuring caused sizeable waves this week as companies like Kirkland & Ellis, Slaughter and May and Akin Gump closed successfully.
The transaction sees offshore drilling services company Valaris emerge from Chapter 11 after the company filed an application in August 2020. It eliminated US $ 7.1 billion in debt and secured a capital injection of US $ 520 million through the issuance of new $ 550 million secured notes.
The restructuring, which was subject to a number of complex conditions, including antitrust clearances in Saudi Arabia and Mexico, was carried out under a UK administrative proceeding and resulted in the sale of Valaris’ business and assets to a newly formed Bermuda company by existing creditors the company. Jonny Marston and Mark Firmin from Alvarez & Marsal Europe have been appointed joint administrators of Valaris. The common shares and warrants of the new parent company of the Valaris Group were traded on the NYSE on May 3, 2021.
Valaris deployed strong teams from Slaughters and Kirkland, the latter team being led by Chicago partners Anup Sathy, Ross Kwasteniet and Spencer Winters.
The Slaughters team advising Valaris was led by restructuring partner Ian Johnson and corporate partner Hywel Davies along with corporate partner Christian Boney and financing partner Samay Shah. Mike Lane advised partner Will Turtle on tax and antitrust matters, while partner Peter Wickham handled dispute resolution issues.
A separate Slaughters team, led by restructuring partner Tom Vickers and supported by Rebecca Davies, advises the joint administrators of Valaris.
In London, James Terry, Akin Gump’s financial restructuring partner, was senior advisor to the ad hoc group of creditors. The team also included Hong Kong partner Naomi Moore, London competition partner Davina Garrod, finance partner Stephen Peppiatt and financial regulator partner Ezra Zahabi, tax partner Stuart Sinclair and Sophie Donnithorne-Tait, international trading partner Chiara Klaui and Christian Davis, corporate partner Vance Chapman and corporate partner Rizwan Kanji from the UAE.
Kramer Levin Naftalis & Frankel of New York acted as senior US attorney for the ad hoc group of senior guaranteed creditors, and the Texas attorney for the ad hoc group of creditors was served by Porter Hedges partners John Higgins and Shane Johnson.
Akin Gump’s James Terry commented on the transaction: “This was an exceptional case. It started with $ 7 billion in debt, holders of multiple series of bonds issued by five different companies within the structure, a major litigation involving the Rowan bondholders, an activist stock investor with board of directorships, and a revolving bank lender group Claims were initiated that were structurally superior to the bonds. In just over a year, the company and stakeholders have come together to create a debased balance sheet and strong liquidity position for future business.
“It was a great example of global collaboration between law firms with Akin Gump who provide our clients with English, Hong Kong, German, United Arab Emirates and international antitrust advice alongside their leading Chapter 11 attorney Kramer Levin.”
Slaughters partner Ian Johnson added: “As Valaris was established in England and Wales it was necessary to consider parallel English procedures and after extensive discussion in Chapter 11, the agreed reorganization was carried out as a pre-fab administrative sale of Valaris’ business and assets to a newly formed Bermuda company owned by its existing financial creditors. This follows other recent examples of debtors using Chapter 11 and the UK parallel procedures to reorganize, including Paragon Offshore.
Upon approving the Chapter 11 plan on March 3, 2021, Judge Marvin Isgur of the US Bankruptcy Court ruled that the plan included a “complete debt reduction” for the group and the approval of the plan in eight months as a “remarkable achievement”. Valaris will be well positioned to take advantage of future opportunities as the oil and gas market improves. ‘
Shearman & Sterling partners Fredric Sosnick and Ned Schodek advised the RCF administrative agent and the global co-chairs of the corporate restructuring and bankruptcy group of Morrison & Foerster, Lorenzo Marinuzzi and Jennifer Marines in New York, advised the official committee of unsecured creditors. The London MoFo deal team was led by Howard Morris. David Smith, New York Partner Pryor Cashman, advised the DIP agent and new trustee for secured notes.
Reed Smith and Kirkland advised healthcare investor EW Healthcare Partners on the acquisition of a majority stake in Paris-based pharmaceutical company Laboratoires Majorelle.
The Reed Smith team was led by partner Guilain Hippolyte and also included partners Séverine Martel, Natasha Tardif, Daniel Kadar and Sam Webster.
Kirkland advised EW Healthcare Partners on debt financing with a team led by corporate partners Rory Mullarkey and Daniel McMann, including corporate partner Adam Wexner, debt financing partners Chris Shield and Ambarish Dash, and tax partners Nadine Gelli, Rachel Cantor and Tim Lowe.
August Debouzy and Odinot & Associés advised the founders and majorelles.
Finally, Kirkland surfaced again, this time to Latham & Watkins, on the € 2.1 billion bond offer from European paytech company Nexi. The proceeds will allow Nexi to pre-finance both the Nets merger and the SIA merger, extend the life of its debt and reduce debt costs.
Latham advised the first-time buyers with a team led by London partners Jennifer Engelhardt and Dan Maze. The Kirkland team advising Nexi was led by capital markets partner Matthew
The Italian company Legance also advised Nexi and BonelliErede advised the banks on tax matters.