

	2019		2018
6.875% Senior notes due 2020	$	124.8	$	127.5
4.70% Senior notes due 2021	113.2		112.7
4.875% Senior notes due 2022⁽³⁾	599.2		—
3.00% Exchangeable senior notes due 2024⁽²⁾	699.0		666.8
4.50% Senior notes due 2024⁽¹⁾	302.0		619.8
4.75% Senior notes due 2024⁽³⁾	276.5		—
8.00% Senior notes due 2024⁽¹⁾	295.7		337.0
5.20% Senior notes due 2025⁽¹⁾	331.7		664.4
7.375% Senior notes due 2025⁽³⁾	329.2		—
7.75% Senior notes due 2026	987.1		985.0
7.20% Debentures due 2027⁽¹⁾	111.7		149.3
7.875% Senior notes due 2040	373.3		375.0
5.40% Senior notes due 2042⁽³⁾	262.8		—
5.75% Senior notes due 2044	973.3		972.9
5.85% Senior notes due 2044⁽³⁾	268.8		—
Total debt	$	6,048.3	$	5,010.4
Less: current maturities	124.8		—
Total long-term debt	$	5,923.5	$	5,010.4

In December 2016, Ensco Jersey Finance Limited, a wholly-owned subsidiary of Valaris plc, issued $849.5 million aggregate principal amount of unsecured 2024 Convertible Notes in a private offering. The 2024 Convertible Notes are fully and unconditionally guaranteed, on a senior, unsecured basis, by Valaris plc and are exchangeable into cash, our Class A ordinary shares or a combination thereof, at our election. Interest on the 2024 Convertible Notes is payable semiannually on January 31 and July 31 of each year. The 2024 Convertible Notes will mature on January 31, 2024, unless exchanged, redeemed or repurchased in accordance with their terms prior to such date. Holders may exchange their 2024 Convertible Notes at their option any time prior to July 31, 2023 only under certain circumstances set forth in the indenture governing the 2024 Convertible Notes. On or after July 31, 2023, holders may exchange their 2024 Convertible Notes at any time. The exchange rate is 17.8336 shares per $1,000 principal amount of notes, representing an exchange price of $56.08 per share, and is subject to adjustment upon certain events. The 2024 Convertible Notes may not be redeemed by us except in the event of certain tax law changes.

Upon conversion of the 2024 Convertible Notes, holders will receive cash, our Class A ordinary shares or a combination thereof, at our election. Our intent is to settle the principal amount of the 2024 Convertible Notes in cash upon conversion. If the conversion value exceeds the principal amount (i.e., our share price exceeds the exchange price on the date of conversion), we expect to deliver shares equal to our conversion obligation in excess of the principal amount. During each respective reporting period that our average share price exceeds the exchange price, an assumed number of shares required to settle the conversion obligation in excess of the principal amount will be included in the denominator for our computation of diluted EPS using the treasury stock method. See "Note 1 - Description of the Business and Summary of Significant Accounting Policies" for additional information regarding the impact to our EPS.

The 2024 Convertible Notes were separated into their liability and equity components and included in long-term debt and additional paid-in capital on our consolidated balance sheet, respectively. The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not include an associated conversion feature. The carrying amount of the equity component representing the conversion feature was determined by deducting the fair value of the liability component from the principal amount of the 2024 Convertible Notes. The difference between the carrying amount of the liability and the principal amount is amortized to interest expense over the term of the 2024 Convertible Notes, together with the coupon interest, resulting in an effective interest rate of approximately 8% per annum. The equity component is not remeasured if we continue to meet certain conditions for equity classification.

The costs related to the issuance of the 2024 Convertible Notes were allocated to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component are amortized to interest expense over the term of the notes and the issuance costs attributable to the equity component were recorded to additional paid-in capital on our consolidated balance sheet.

During the year ended December 31, 2019, 2018 and 2017, we recognized $25.5 million associated with coupon interest. Amortization of debt discount and issuance costs were $32.5 million, $31.0 million and $31.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The indenture governing the 2024 Convertible Notes contains customary events of default, including failure to pay principal or interest on such notes when due, among others. The indenture also contains certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create or incur secured indebtedness, enter into certain sale/leaseback transactions and enter into certain merger or consolidation transactions.

As a result of the Rowan Transaction, we acquired the following debt issued by Rowan Companies, Inc. ("RCI") and guaranteed by Rowan: (1) $201.4 million in aggregate principal amount of 7.875% unsecured senior notes, which was repaid at maturity in August 2019, (2) $620.8 million in aggregate principal amount of 4.875% unsecured senior notes due 2022 (the "Rowan 2022 Notes"), (3) $398.1 million in aggregate principal amount of 4.75% unsecured senior notes due 2024 (the "Rowan 2024 Notes"), (4) $500.0 million in aggregate principal amount of 7.375% unsecured senior notes due 2025 (the "Rowan 2025 Notes"), (5) $400.0 million in aggregate principal amount of 5.4% unsecured senior notes due 2042 (the "Rowan 2042 Notes") and (6) $400.0 million in aggregate principal amount of 5.85% unsecured senior notes due 2044 (the "Rowan 2044 Notes" and collectively, the "Rowan Notes"). Upon closing of the Rowan Transaction, we terminated Rowan's outstanding credit facilities. On February 3, 2020, Rowan and RCI transferred substantially all their assets on a consolidated basis to Valaris plc, Valaris plc became the obligor on the notes and Rowan and RCI were relieved of their obligations under the notes and the related indenture.

On January 26, 2018, we issued $1.0 billion aggregate principal amount of unsecured 7.75% senior notes due 2026 (the "2026 Notes") at par, net of $16.5 million of debt issuance costs. Interest on the 2026 Notes is payable semiannually on February 1 and August 1 of each year.

During 2017, we exchanged $332.0 million aggregate principal amount of unsecured 8.00% senior notes due 2024 (the “8 % 2024 Notes”) for certain amounts of our outstanding senior notes due 2019, 2020 and 2021. Interest on the 8% 2024 Notes is payable semiannually on January 31 and July 31 of each year.

During 2015, we issued $700.0 million aggregate principal amount of unsecured 5.20% senior notes due 2025 (the “2025 Notes”) at a discount of $2.6 million and $400.0 million aggregate principal amount of unsecured 5.75% senior notes due 2044 (the “New 2044 Notes”) at a discount of $18.7 million in a public offering. Interest on the 2025 Notes is payable semiannually on March 15 and September 15 of each year. Interest on the New 2044 Notes is payable semiannually on April 1 and October 1 of each year.

During 2014, we issued $625.0 million aggregate principal amount of unsecured 4.50% senior notes due 2024 (the "2024 Notes") at a discount of $0.9 million and $625.0 million aggregate principal amount of unsecured 5.75% senior notes due 2044 (the "Existing 2044 Notes" and together with the New 2044 Notes, the "2044 Notes") at a discount of $2.8 million. Interest on the 2024 Notes and the Existing 2044 Notes is payable semiannually on April 1 and October 1 of each year. The Existing 2044 Notes and the New 2044 Notes are treated as a single series of debt securities under the indenture governing the notes.

During 2011, we issued $1.5 billion aggregate principal amount of unsecured 4.70% senior notes due 2021 (the “2021 Notes”) at a discount of $29.6 million in a public offering. Interest on the 2021 Notes is payable semiannually on March 15 and September 15 of each year.

Upon consummation of the Pride International LLC ("Pride") acquisition during 2011, we assumed outstanding debt comprised of $900.0 million aggregate principal amount of unsecured 6.875% senior notes due 2020, $500.0 million aggregate principal amount of unsecured 8.5% senior notes due 2019 and $300.0 million aggregate principal amount of unsecured 7.875% senior notes due 2040 (collectively, the "Acquired Notes" and together with the Rowan Notes, 2021 Notes, 8% 2024 Notes, 2024 Notes, 2025 Notes, 2026 Notes and 2044 Notes, the "Senior Notes"). Valaris plc has fully and unconditionally guaranteed the performance of all Pride obligations with respect to the Acquired Notes. See "Note 17 - Guarantee of Registered Securities" for additional information on the guarantee of the Acquired Notes.

We may redeem the Senior Notes in whole at any time, or in part from time to time, prior to maturity. If we elect to redeem the Rowan 2022 Notes, Rowan 2024 Notes, 8% 2024 Notes, 2024 Notes, 2025 Notes, Rowan 2025 Notes and 2026 Notes before the date that is three months prior to the maturity date or the Rowan 2042 Notes, Rowan 2044 Notes and 2044 Notes before the date that is six months prior to the maturity date, we will pay an amount equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest and a "make-whole" premium. If we elect to redeem these notes on or after the aforementioned dates, we will pay an amount equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest but we are not required to pay a "make-whole" premium.

The indentures governing the Senior Notes contain customary events of default, including failure to pay principal or interest on such notes when due, among others. The indentures governing the Senior Notes also contain certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create or incur secured indebtedness, enter into certain sale/leaseback transactions and enter into certain merger or consolidation transactions.

During 1997, Ensco International Incorporated issued $150.0 million of unsecured 7.20% Debentures due 2027 (the "Debentures"). Interest on the Debentures is payable semiannually on May 15 and November 15 of each year. We may redeem the Debentures, in whole or in part, at any time prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a "make-whole" premium. During 2009, Ensco plc entered into a supplemental indenture to unconditionally guarantee the principal and interest payments on the Debentures. See "Note 17 - Guarantee of Registered Securities" for additional information on the guarantee of the Debentures.

The Debentures and the indenture pursuant to which the Debentures were issued also contain customary events of default, including failure to pay principal or interest on the Debentures when due, among others. The indenture also contains certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create or incur secured indebtedness, enter into certain sale/leaseback transactions and enter into certain merger or consolidation transactions.

On June 25, 2019, we commenced cash tender offers for certain series of senior notes issued by us, Ensco International Incorporated and RCI, our wholly-owned subsidiaries. The tender offers expired on July 23, 2019, and we repurchased $951.8 million of our outstanding senior notes for an aggregate purchase price of $724.1 million. As a result of the transaction, we recognized a pre-tax gain from debt extinguishment of $194.1 million, net of discounts, premiums and debt issuance costs in other, net, in the consolidated statement of operations.

Concurrent with the issuance of the 2026 Notes in January 2018, we launched cash tender offers for up to $985.0 million aggregate principal amount of certain series of senior notes issued by us and Pride, our wholly-owned subsidiary, and as a result we repurchased $595.4 million of our senior notes. Subsequently, we issued a redemption notice for the remaining principal amount of the $55.0 million principal amount of the 8.50% senior notes due 2019 and repurchased $71.4 million principal amount of our senior notes due 2020. As a result of these transactions, we recognized a pre-tax loss from debt extinguishment of $19.0 million, net of discounts, premiums, debt issuance costs and commissions in other, net, in the consolidated statement of operations.

During 2017, we repurchased $194.1 million of our outstanding senior notes on the open market for an aggregate purchase price of $204.5 million with cash on hand and recognized an insignificant pre-tax gain, net of discounts, premiums and debt issuance costs.



	Aggregate Principal Amount Repurchased		Aggregate Repurchase Price⁽¹⁾
Year Ended December 31, 2019
4.50% Senior notes due 2024	$	320.0	$	240.0
4.75% Senior notes due 2024	79.5		61.2
8.00% Senior notes due 2024	39.7		33.8
5.20% Senior notes due 2025	335.5		250.0
7.375% Senior notes due 2025	139.2		109.2
7.20% Senior notes due 2027	37.9		29.9
	$	951.8	$	724.1
Year Ended December 31, 2018
8.50% Senior notes due 2019	$	237.6	$	256.8
6.875% Senior notes due 2020	328.0		354.7
4.70% Senior notes due 2021	156.2		159.7
	$	721.8	$	771.2
Year Ended December 31, 2017
8.50% Senior notes due 2019	$	54.6	$	60.1
6.875% Senior notes due 2020	100.1		105.1
4.70% Senior notes due 2021	39.4		39.3
	$	194.1	$	204.5

During 2017, we completed exchange offers to exchange our outstanding 2019, 2020 and 2021 Notes for our 8% 2024 Notes and cash. The exchange offers resulted in the tender of $649.5 million aggregate principal amount of our outstanding notes that were settled and exchanged as follows (in millions):



	Aggregate Principal Amount Repurchased		8% Senior Notes Due 2024 Consideration		Cash Consideration		Total Consideration
8.50% Senior notes due 2019	$	145.8	$	81.6	$	81.7	$	163.3
6.875% Senior notes due 2020	129.8		69.3		69.4		138.7
4.70% Senior notes due 2021	373.9		181.1		181.4		362.5
	$	649.5	$	332.0	$	332.5	$	664.5

Effective upon closing of the Rowan Transaction, we amended our credit facility to, among other changes, increase the borrowing capacity. Previously, our credit facility had a borrowing capacity of $2.0 billion through September 2019 that declined to $1.3 billion through September 2020 and $1.2 billion through September 2022. Subsequent to the amendment, our borrowing capacity is $1.6 billion through September 2022. The credit agreement governing the Credit Facility includes an accordion feature allowing us to increase the future commitments up to an aggregate amount not to exceed $250.0 million.

Advances under the credit facility bear interest at Base Rate or LIBOR plus an applicable margin rate, depending on our credit ratings. We are required to pay a quarterly commitment fee on the undrawn portion of the $1.6 billion commitment, which is also based on our credit ratings.

On December 6, 2019, Moody's downgraded our corporate family rating from B3 to Caa1 and our senior unsecured notes from Caa1 to Caa2. Previously, in September 2019, Standard & Poor's downgraded our senior unsecured bonds from B to B- and our issuer rating from B- to CCC+. The applicable margin rates are 3.25% per annum for Base Rate advances and 4.25% per annum for LIBOR advances. The quarterly commitment fee is 0.75% per annum on the undrawn portion of the $1.6 billion commitment.

The credit facility requires us to maintain a total debt to total capitalization ratio that is less than or equal to 60% and to provide guarantees from certain of our rig-owning subsidiaries sufficient to meet certain guarantee coverage ratios. The credit facility also contains customary restrictive covenants, including, among others, prohibitions on creating, incurring or assuming certain debt and liens (subject to customary exceptions, including a permitted lien basket that permits us to raise secured debt up to the lesser of $1 billion or 10% of consolidated tangible net worth (as defined in the credit facility)); entering into certain merger arrangements; selling, leasing, transferring or otherwise disposing of all or substantially all of our assets; making a material change in the nature of the business; paying or distributing dividends on our ordinary shares (subject to certain exceptions, including the ability to pay a quarterly dividend of $0.01 per share); borrowings, if after giving effect to any such borrowings and the application of the proceeds thereof, the aggregate amount of available cash (as defined in the credit facility) would exceed $200 million; and entering into certain transactions with affiliates.

The credit facility also includes a covenant restricting our ability to repay indebtedness maturing after September 2022, which is the final maturity date of our credit facility. This covenant is subject to certain exceptions that permit us to manage our balance sheet, including the ability to make repayments of indebtedness (i) of acquired companies within 90 days of the completion of the acquisition or (ii) if, after giving effect to such repayments, available

As of December 31, 2019, we were in compliance in all material respects with our covenants under the credit facility. We expect to remain in compliance with our credit facility covenants during 2020. We had no amounts outstanding under the credit facility as of December 31, 2019 and 2018. As of January 31, 2020, we had $90 million of total outstanding borrowings under our credit facility.

Our access to credit and capital markets depends on the credit ratings assigned to our debt. As a result of rating actions by credit rating agencies, we no longer maintain an investment-grade status. Our current credit ratings, and any additional actual or anticipated downgrades in our credit ratings, could limit our available options when accessing credit and capital markets, or when restructuring or refinancing our debt. In addition, future financings or refinancings are likely to involve higher borrowing costs and require more restrictive terms and covenants, which may further restrict our operations.

The descriptions of our senior notes above reflect the original principal amounts issued, which have subsequently changed as a result of our tenders, repurchases, exchanges, redemptions and new debt issuances such that the maturities of our debt were as follows (in millions):



Senior Notes	Original Principal		2016 Tenders, Repurchases and Equity Exchange			2017 Exchange Offers and Repurchases			2018 Tender Offers, Redemption and Debt Issuance			2019 Tender Offers, Redemption and Debt Issuance			Remaining Principal
6.875% due 2020	$	900.0	$	(219.2	)	$	(229.9	)	$	(328.0	)	$	—		$	122.9
4.70% due 2021	1,500.0		(817.0		)	(413.3		)	(156.2		)	—			113.5
4.875% due 2022 ⁽¹⁾	—		—			—			—			620.8			620.8
3.00% Exchangeable senior notes due 2024	849.5		—			—			—			—			849.5
4.50% due 2024	625.0		(1.7		)	—			—			(320.0		)	303.3
4.75% due 2024 ⁽¹⁾	—		—			—			—			318.6			318.6
8.00% due 2024	—		—			332.0			—			(39.7		)	292.3
5.20% due 2025	700.0		(30.7		)	—			—			(335.5		)	333.8
7.375% due 2025 ⁽¹⁾	—		—			—			—			360.8			360.8
7.75% due 2026	—		—			—			1,000.0			—			1,000.0
7.20% due 2027	150.0		—			—			—			(37.9		)	112.1
7.875% due 2040	300.0		—			—			—			—			300.0
5.40% due 2042 ⁽¹⁾	—		—			—			—			400.0			400.0
5.75% due 2044	1,025.0		(24.5		)	—			—			—			1,000.5
5.85% due 2044 ⁽¹⁾	—		—			—			—			400.0			400.0
Total	$	6,049.5	$	(1,093.1	)	$	(311.2	)	$	515.8		$	1,367.1		$	6,528.1

Interest expense totaled $428.3 million, $282.7 million and $224.2 million for the years ended December 31, 2019, 2018 and 2017, respectively, which was net of capitalized interest of $20.9 million, $62.6 million and $72.5 million associated with newbuild rig construction and other capital projects.