XML 31 R14.htm IDEA: XBRL DOCUMENT v3.20.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
The following fair value hierarchy table categorizes information regarding our financial assets and liabilities measured at fair value on a recurring basis (in millions):
Quoted Prices in
Active Markets
for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
  (Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
As of December 31, 2020    
Supplemental executive retirement plan assets
$22.6 $— $— $22.6 
Total financial assets$22.6 $— $— $22.6 
As of December 31, 2019    
Supplemental executive retirement plan assets
$26.0 $— $— $26.0 
Derivatives, net
— 5.4 — 5.4 
Total financial assets$26.0 $5.4 $— $31.4 

Supplemental Executive Retirement Plan Assets

Our Valaris supplemental executive retirement plans (the "SERPs") are non-qualified plans that provide eligible employees an opportunity to defer a portion of their compensation for use after retirement. The SERPs were frozen to the entry of new participants in November 2019 and to future compensation deferrals as of January 1, 2020. Assets held in a rabbi trust maintained for the SERP are marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets, net, on our consolidated balance sheets as of December 31, 2020 and 2019.  The fair value measurements of assets held in the SERP were based on quoted market prices. Net unrealized gains of $3.2 million and $5.0 million and losses of $700,000 from marketable securities held in our SERP were included in other, net, in our consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, respectively.
 
Derivatives

As of December 31, 2020, we had no derivative contracts outstanding See "Note 9 - Derivative Instruments" for additional information on the impact of the Chapter 11 Cases to our derivatives. Our derivatives were measured at fair value on a recurring basis using Level 2 inputs as of December 31, 2019.   See "Note 9 - Derivative Instruments" for additional information on our derivatives, including a description of our foreign currency hedging activities and related methodologies used to manage foreign currency exchange rate risk. The fair value measurements of our derivatives were based on market prices that are generally observable for similar assets or liabilities at commonly quoted intervals.
Other Financial Instruments

The carrying values and estimated fair values of our debt instruments were as follows (in millions):
Subject to Compromise (1)
December 31, 2020December 31, 2019
Carrying
Value		Estimated
  Fair
Value		Carrying
Value		Estimated
  Fair
Value
6.875% Senior notes due 2020
$122.9 $8.6 $124.8 $117.3 
4.70% Senior notes due 2021
100.7 4.5 113.2 95.5 
4.875% Senior notes due 2022
620.8 32.9 599.2 460.5 
3.00% Exchangeable senior notes due 2024 (2)
849.5 76.5 699.0 607.4 
4.50% Senior notes due 2024
303.4 13.7 302.0 167.2 
4.75% Senior notes due 2024
318.6 18.8 276.5 201.4 
8.00% Senior notes due 2024
292.3 12.9 295.7 181.7 
5.20% Senior notes due 2025
333.7 12.7 331.7 186.7 
7.375% Senior notes due 2025
360.8 20.9 329.2 218.6 
7.75% Senior notes due 2026
1,000.0 44.0 987.1 575.1 
7.20% Debentures due 2027
112.1 5.7 111.7 70.0 
7.875% Senior notes due 2040
300.0 21.0 373.3 153.5 
5.40% Senior notes due 2042
400.0 23.6 262.8 194.4 
5.75% Senior notes due 2044
1,000.5 38.0 973.3 450.0 
5.85% Senior notes due 2044
400.0 26.0 268.8 194.8 
Amounts borrowed under revolving credit facility (3)
581.0 581.0 — — 
Total debt$7,096.3 $940.8 $6,048.3 $3,874.1 
Less : Liabilities Subject to Compromise7,096.3 940.8 — — 
Less: current maturities— — 124.8 — 
Total long-term debt$— $— $5,923.5 $3,874.1 

(1)    The commencement of the Chapter 11 Cases on August 19, 2020, constituted an event of default under our Senior Notes and revolving credit facility. Any efforts to enforce payment obligations under the Senior Notes and revolving credit facility, including any rights to require the repurchase by the Company of the 2024 Convertible Notes (as defined below) upon the NYSE delisting of the Class A ordinary shares, are automatically stayed as a result of the filing of the Chapter 11 Cases. The carrying amounts above represent the aggregate principal amount of Senior Notes outstanding as well as outstanding borrowings under our revolving credit facility as of the Petition Date and are classified as Liabilities Subject to Compromise in our Consolidated Balance Sheet as of December 31, 2020. We discontinued accruing interest on our indebtedness following the Petition Date and all accrued interest as of the Petition Date is classified as Liabilities Subject to Compromise in our Consolidated Balance Sheet as of December 31, 2020. Additionally, we incurred a net non-cash charge of $447.9 million to write off any unamortized debt discounts, premiums and issuance costs, including the amounts related to the 2024 Convertible Notes discussed below, which is included in Reorganization Items, net on our Consolidated Statement of Operations for the year ended December 31, 2020. See "Note 2 - Chapter 11 Proceedings and Ability to Continue as a Going Concern" for additional information.

(2)    Our 2024 Convertible Notes are exchangeable into cash, our Class A ordinary shares or a combination thereof. The 2024 Convertible Notes were separated, at issuance, into their liability and equity components on our Consolidated Balance Sheet. The equity component was initially recorded to additional paid-in capital and as a debt discount and the discount was being amortized to interest expense over the life of the instrument. As discussed above, the carrying amount at December 31, 2020 represents the aggregate
principal amount of these notes as of the Petition Date and are classified as Liabilities Subject to Compromise in our Consolidated Balance Sheet as of December 31, 2020. We discontinued accruing interest on these notes as of the Petition Date. Additionally, we incurred a net non-cash charge of $128.8 million to write off $119.5 million of unamortized debt discount and $9.3 million of unamortized debt issuance costs related to these notes, which is included in Reorganization Items, net on our Consolidated Statement of Operations for the year ended December 31, 2020. The equity component is $220.0 million at December 31, 2020 and remains in Additional Paid-Capital.

(3)    In addition to the amount borrowed above, we had $27.0 million in undrawn letters of credit issued under the revolving credit facility.

While the revolving credit facility has not been terminated, no further borrowings are permitted. As discussed above, the carrying amount at December 31, 2020 represents the outstanding borrowings as of the Petition Date and are classified as Liabilities Subject to Compromise in our Consolidated Balance Sheet as of December 31, 2020. We discontinued accruing interest on the revolving credit facility as of the Petition Date and wrote off any unamortized debt issuance costs.
The estimated fair values of our senior notes and debentures were determined using quoted market prices, which are level 1 inputs. The estimated fair values of our cash and cash equivalents, accounts receivable, notes receivable, trade payables and other liabilities approximated their carrying values as of December 31, 2020 and 2019.