BY Fraser Tennant
Following months of speculation, American multinational technology company Avaya Holdings Corp. along with its US subsidiaries has filed for Chapter 11 bankruptcy and entered into a restructuring support agreement (RSA).
The filing in the US Bankruptcy Court for the Southern District of Texas is the second time in six years the North Carolina-based Avaya has sought bankruptcy protection.
The Chapter 11 process will help Avaya to implement the RSA and accelerate its ongoing business transformation, significantly enhance its ability to invest in its innovative cloud-based communications portfolio and position the company for long-term success.
Completing the RSA will reduce Avaya’s total debt by more than 75 percent, from approximately $3.4bn to approximately $800m. In addition, it will substantially increase Avaya’s cash and strengthen its liquidity position.
“Strengthening Avaya’s capital structure is a critical step to fully realize our transformation,” said Alan Masarek, chief executive of Avaya. “We are excited to move ahead as a well-capitalised company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”
“I joined Avaya to help unlock the power of its iconic brand, global customer footprint, massive partner ecosystem, large-scale communications deployments and outstanding team,” he continued. “Building on this tremendous foundation, we have made significant progress pioneering an ambitious business model transformation, establishing a competitive product strategy for our subscription and cloud-delivered services and implementing operational efficiencies to better serve the Avaya ecosystem.”
Avaya has stated that it will continue serving its customers and partners without interruption and providing them with outstanding communications solutions, service and support.
Moreover, due to the overwhelming support of its financial stakeholders, Avaya expects to implement the RSA on an expedited basis and complete this comprehensive balance sheet deleveraging within 60 to 90 days. These actions will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.
“We appreciate the strong support from our investors, who recognise the incredible value in Avaya’s business, brand and opportunities ahead,” concluded Mr Masarek. “With this additional financial strength, we will be ideally positioned to accelerate innovation and advance our cutting-edge, long-range product roadmaps for the benefit of our customers.”