The world’s largest offshore rig operator, Valaris, announced Tuesday that its stock will soon be delisted from the New York Stock Exchange. The announcement follows last week’s news that the firm will be filing for a Chapter 11 bankruptcy reorganization.
Last Wednesday, Valaris announced that it had reached a deal with half of its bondholders to reduce its debt load and finance its continuing operations. The agreement includes a voluntary Chapter 11 filing, and Valaris said that it aims to complete the bankruptcy process quickly and efficiently while sustaining business operations as usual.
“The substantial downturn in the energy sector, exacerbated by the COVID-19 pandemic, requires that we take this step to create a stronger company able to adapt to the prolonged contraction in the industry, and to continue to enhance our position as overall market conditions improve,” said Tom Burke, Valaris’ president and CEO. “We have taken several steps to right-size and streamline our organization in line with our goal to be the offshore drilling cost leader. Now, we intend to use this restructuring to complement these measures.”
Valaris’ stock will continue to trade on the over-the-counter (OTC Pink) marketplace.
Valaris was formed through the combination of Ensco and Rowan Drilling on April 11, 2019, making it the world’s largest offshore rig company overnight. However, the firm posted significant losses in its first quarterly earnings report, and its share price dropped sharply. A group of investors represented by class-action law firm Pomerantz have filed a suit contending that Valaris had misled shareholders in the run-up to the merger by not adequately disclosing the state of the ultra-deepwater market segment, the rate of its cash usage and its negative cash flow.