- Company Name
- Valaris plc
- Stock Symbol
- Class Period
- April 11, 2019 to July 31, 2019
- Motion Deadline
- October 19, 2019
- Southern District of New York
The complaint charges Valaris and certain of its officers with violations of the Securities Exchange Act of 1934. Valaris provides offshore drilling services, operating in various water depths worldwide. The Company has a rig fleet of ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups. On April 11, 2019, Ensco plc and Rowan Companies plc merger to form Ensco Rowan plc. The merged company was touted as an industry leading offshore driller. On July 2, 2019, Ensco Rowan announced it would change its name to Valaris plc, effective July 31, 2019.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, defendants failed to disclose that the Company was plagued by a weak ultra-deepwater segment, massive cash usage, and significant negative cash flow, which was reasonably likely to have a material negative impact on the Company’s second quarter 2019 results, and that the merger leading to Valaris’s establishment could not deliver on its touted benefits. As a result of this information being withheld from the market, Valaris securities traded at artificially inflated prices, reaching more than $17 per share during the Class Period.
Then on July 31, 2019, Valaris announced second quarter 2019 financial results – its first earnings report reflecting the results of the combined company – that missed market expectations. On August 2, 2019, Seeking Alpha published an article, entitled “Valaris PLC - Off To A Bad Start,” which noted that Valaris’s results “shock[ed] investors with massive cash usage [and a] . . . surprisingly weak outlook for the ultra-deepwater segment with further dayrate recovery likely delayed until at least the second half of next year.” The Seeking Alpha article further criticized the Company’s free cash flow for the quarter, which was “negative by a whopping $375 million causing the company’s remaining pro forma cash balance adjusted for roughly $741 million in payments related to the recent debt tender offer to decline to just $353 million.” On this news, Valaris’s share price fell $3.25 per share, or approximately 39%, over the two trading days following the Company’s earnings announcement, to close at $5.02 per share on August 2, 2019.