Offshore drilling contractor Valaris said Monday it had elected not to make the $13.3 million interest payment due on June 15, 2020, related to its 7.375% Senior Notes due 2025.
The offshore drilling company, which had more than $6.5 billion of debt at the end of the first quarter, said that under the arrangement governing the Notes, the company has a 30-day grace period to make the interest payment before such non-payment constitutes an “event of default."
"The company has elected to enter into the 30-day grace period, which expires on July 15, 2020. As of June 12, 2020, the company had approximately $208 million in cash, in addition to available borrowing capacity under its revolving credit facility. The company continues to have discussions with its lenders and bondholders regarding the terms of a potential comprehensive restructuring of its indebtedness," Valaris said.
As most offshore drilling contractors, Valaris has been hit by the COVID-19 and low oil prices, which have decimated demand for offshore drilling rigs, and led to a number of contract delays, suspensions, and cancelations.
Valaris recently posted a net loss of $3.01 billion, or $15.19 per share, for the first quarter 2020 compared to a net loss of $216 million, or $1.09 per share, in fourth-quarter 2019.
First-quarter 2020 results included a non-cash asset impairment charge of $2.81 billion related to three drillships, three semisubmersibles, and seven jack-up drilling rigs.
In its first-quarter conference call on April 30, the company said that, due to the market situation, it expected to report losses and negative cash flows throughout the remainder of the year.
The company said it was evaluating various alternatives to address its capital structure and annual interest costs.
Earlier in April, Reuters reported, citing people familiar with the matter, that Valaris was preparing to start talks with creditors to see if they can agree on terms for a possible bankruptcy filing.