0001418100false00014181002022-12-132022-12-13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 13,
2022
AVAYA HOLDINGS CORP.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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001-38289
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26-1119726
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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2605 Meridian Parkway, Suite 200
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Durham,
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North Carolina
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27713
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(Address of Principal Executive Office)
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(Zip Code)
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Registrant's telephone number, including area code:
(908) 953-6000
N/A
(Former Name or Former Address, if Changed Since Last
Report)
____________________
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock |
AVYA |
New York Stock Exchange |
Item 7.01. Regulation FD Disclosure.
Cleansing Materials
In October, November and December of 2022, Avaya Holdings Corp.
(“Avaya Holdings” and, together with its consolidated subsidiaries,
the “Company”) executed confidentiality agreements (collectively,
the “Confidentiality Agreements”) with (i) certain holders
(collectively, the “Convertible Group”) of the 2.25% Convertible
Senior Notes due 2023 issued by Avaya Holdings and the term loans
(the “Term Loans”) outstanding under the Term Loan Credit
Agreement, dated as of December 15, 2017, as amended, by and among
Avaya Inc. (“Avaya”), as borrower, Avaya Holdings, Goldman Sachs
Bank USA, as administrative agent and collateral agent, the
subsidiary guarantors party thereto and each lender from time to
time party thereto; (ii) certain holders of the 6.125% Senior
Secured Notes due 2028 issued by Avaya and certain other holders of
the Term Loans (collectively, the “Term Loan and Senior Notes
Group”); (iii) certain other holders of the Term Loans
(collectively, the “Term Loan Group”); and (iv) a certain holder of
the 8.00% Exchangeable Senior Secured Notes due 2027 issued by
Avaya (the “Exchangeable Notes Holder” and, together with the
Convertible Group, the Term Loan and Senior Notes Group and the
Term Loan Group, the “NDA Parties”). These Confidentiality
Agreements facilitated the Company’s ability to engage in
discussions with the NDA Parties regarding one or more potential
financings, refinancings, recapitalizations, reorganizations,
restructurings or investment transactions involving the Company
(collectively, a “Transaction”). Pursuant to the Confidentiality
Agreements, if certain conditions were met, the Company agreed to
disclose publicly by a certain date (a) that the Company and the
NDA Parties had engaged in discussions concerning a Transaction,
(b) that the Company had provided certain confidential information
concerning the Company to the NDA Parties and (c) certain
confidential information previously disclosed to the NDA Parties
pursuant to the Confidentiality Agreements (collectively, the
“Cleansing Materials”). The Cleansing Materials included as Exhibit
99.1 hereto are being furnished in satisfaction of the Company’s
public disclosure obligations under the Confidentiality
Agreements.
While discussions regarding a potential Transaction remain ongoing,
as of the date hereof, the Company has not reached an agreement
with respect to the material terms of a Transaction and there can
be no assurances that such an agreement will be reached in the
future. Included in Exhibit 99.1 is the last term sheet proposal
submitted by (i) the Company to the Convertible Group and the Term
Loan Group, (ii) the Convertible Group to the Company, (iii) the
Company to the Term Loan and Senior Notes Group and the Term Loan
Group, and (iv) the Term Loan and Senior Notes Group and the Term
Loan Group to the Company. The Company will continue to engage with
all of its financial stakeholders regarding a comprehensive
resolution.
As of the date hereof, the Company has been advised by the Term
Loan and Senior Notes Group and the Term Loan Group that their
groups (i) are not supportive of the out-of-court transaction and
therefore, the Company cannot satisfy the conditions to the
commitment letter described below, and (ii) have reached an
agreement in principle with respect to the key terms for a
potential Transaction, and such key terms are reflected in the term
sheets included in Exhibit 99.1.
In connection with these discussions regarding a potential
out-of-court transaction, certain members of the Convertible Group
provided the Company with a commitment letter (that the Company did
not sign) pursuant to which such entities would backstop a
$385,000,000 Term Loan Facility as described further in the
out-of-court term sheets included in Exhibit 99.1.
The information set forth in this Current Report on Form 8-K and
the exhibit attached hereto is not an offer to sell or exchange, or
solicitation of an offer to buy, any securities, or a solicitation
of consents with respect to any securities.
The information set forth in this Current Report on Form 8-K and
the exhibit attached hereto shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
Cautionary Note Information Regarding Projections
The financial projections, prospective financial information and
forecasts (collectively, the “Projections”) included in the
Cleansing Materials were not prepared with a view towards public
disclosure or compliance with the published guidelines of the
Securities and Exchange Commission (the “SEC”) or the guidelines
established by the American Institute of Certified Public
Accountants for the presentation and preparation of “prospective
financial information.” The Company generally does not publicly
disclose detailed prospective financial information. The
Projections were prepared for the internal use of the Company and
were provided pursuant to the Confidentiality Agreements for the
limited purpose of providing information in connection with the
Company’s discussions about a potential Transaction.
The Projections have been prepared by, and are the responsibility
of the Company’s management. The Projections do not purport to
present the Company’s financial condition in accordance with
accounting principles generally accepted in the United States.
Neither the independent registered public accounting firm of the
Company nor any other independent accountant has audited, reviewed,
examined, compiled, or performed any procedures with respect to the
Projections and, accordingly, none has expressed any opinion or any
other form of assurance on such information or its achievability
and none assumes any responsibility for the
Projections.
The inclusion of the Projections should not be regarded as an
indication that the Company or any other person considered, or now
consider, the Projections to be a reliable prediction of future
events, and does not constitute an admission or representation by
any person that the expectations, beliefs, opinions, and
assumptions that underlie such forecasts remain the same as of the
date of this Current Report on Form 8-K, and readers are cautioned
not to place undue reliance on the prospective financial
information.
The estimates and assumptions underlying the Projections are
subject to significant economic and competitive uncertainties and
contingencies, which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company
and may not prove to be accurate. For instance, the Projections
assume the release of approximately $221 million of restricted cash
held in escrow by the end of January 2023, the extension and
modification of the Company’s strategic partnership with
RingCentral, Inc. and the entry into one or more Transactions. The
events underlying these assumptions have not been realized as of
the date of this Current Report, however, with respect to a
potential out-of-court transaction, the Company and RingCentral,
Inc. have substantial agreement in principle on a non-binding basis
with respect to certain potential modifications to the parties’
strategic partnership and discussions regarding potential
modifications remain ongoing. The Company remains committed to a
strategic partnership with RingCentral. The Projections also do not
reflect future changes in general business or economic conditions,
or any other transaction or event that may occur and that was not
anticipated at the time this information was prepared. The
Projections are not, and should not be regarded as, a
representation that any of the expectations contained in, or
forming a part of, the Projections will be achieved. The
Projections are forward-looking in nature. Further, the Projections
relate to multiple future years and such information by its nature
becomes less predictive with each succeeding day. Accordingly, the
Company cannot provide any assurance that the Projections will be
realized; actual future financial results will vary from such
forward-looking information and may vary materially.
All financial results for the third quarter ended June 30, 2022 and
related comparisons to prior periods included in the Cleansing
Materials are preliminary, have not been reviewed or audited, are
based upon the Company’s estimates, and were prepared prior to the
completion of the Company's financial statement close process.
These selected preliminary financial results should not be viewed
as a substitute for the Company’s full third quarter results and do
not present all information necessary for an understanding of the
Company’s financial performance as of June 30, 2022, and should not
be considered final until the Company files its Quarterly Report on
Form 10-Q for the quarter ended June 30, 2022. During the course of
the preparation of the Company’s financial statements as of and for
the three and nine months ended June 30, 2022, the Company may
identify items that could cause its final reported results to be
materially different from the preliminary financial information set
forth in this report. Accordingly, undue reliance should not be
placed on this preliminary data.
The above considerations should be taken into account in reviewing
the Cleansing Materials, which were prepared as of an earlier date.
See “Cautionary
Note Regarding Forward-Looking Statements.”
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K and the exhibit hereto contain
certain “forward-looking statements.” All statements other than
statements of historical fact, including the Projections, are
“forward-looking” statements for purposes of the U.S. federal and
state securities laws. These statements may be identified by the
use of forward-looking terminology such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “our vision,” “plan,” “potential,” “preliminary,”
“predict,” “should,” “will,” or “would” or the negative thereof or
other variations thereof or comparable terminology. These
forward-looking statements are subject to a number of factors and
uncertainties that could cause the Company’s actual results to
differ materially from those expressed in or contemplated by the
forward-looking statements. Such factors include, but are not
limited to: the ability of the Company to negotiate and execute a
successful Transaction; the finalization of the Company’s third
quarter and annual financial statements (including finalization of
the Company’s impairment tests); completion of standard
annual-close processes; the Company’s ability to address the
convertible notes that mature in June 2023 and continue as a going
concern; the risk of an event of default under one or more of the
Company’s senior debt facilities, including as a result of the
Company’s failure to timely finalize its annual financial
statements; the findings of the Company’s internal investigations;
the effectiveness of the Company’s internal control over financial
reporting and disclosure controls and procedures, and the potential
for additional material weaknesses in the Company’s internal
controls over financial reporting or other potential
weaknesses of which the Company is not currently aware or which
have not been detected; the impact of litigation and regulatory
proceedings; the impact and timing of any cost-savings measures;
the termination or modification of current contracts which could
impair attainment of the Company’s OneCloud ARR metric; the
duration, severity and impact of the coronavirus pandemic; the
impact of the Russia/Ukraine conflict on the global economy and the
Company’s business, including impacts from related sanctions and
export controls imposed by the U.S., UK and the EU on certain
industries and Russian parties as a result of the conflict, as well
as responses by the governments of Russia or other jurisdictions;
and other factors discussed in Avaya Holdings’ Annual Report on
Form 10-K and subsequent quarterly reports on Form 10-Q filed with
the SEC. These risks and uncertainties may cause the Company’s
actual results, performance, liquidity or achievements to differ
materially from any future results, performance, liquidity or
achievements expressed or implied by these forward-looking
statements. For a further list and description of such risks and
uncertainties, please refer to Avaya Holdings’ filings with the SEC
that are available at www.sec.gov. The Company cautions you that
the list of important factors included in the Company’s SEC filings
may not contain all of the material factors that are important to
you. In addition, in light of these risks and uncertainties, the
matters referred to in the forward-looking statements contained in
this report may not in fact occur. The Company undertakes no
obligation to publicly update or revise any forward-looking
statement, including the Projections, as a result of new
information, future events or otherwise, except as otherwise
required by law.
Use of non-GAAP (Adjusted) Financial Measures
The information furnished in the Cleansing Materials includes
non-GAAP financial measures that differ from measures calculated in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”). Non-GAAP revenue is defined as
GAAP revenue adjusted for the impact of fresh start accounting
adjustments. EBITDA is defined as net income (loss) before income
taxes, interest expense, interest income and depreciation and
amortization. Adjusted EBITDA is EBITDA further adjusted to exclude
certain charges and other adjustments described in Avaya Holdings’
SEC filings. The Company believes that including supplementary
information concerning adjusted EBITDA is appropriate because it
serves as a basis for determining management and employee
compensation and it is used as a basis for calculating covenants in
the Company’s credit agreements. In addition, the Company believes
adjusted EBITDA provides more comparability between its historical
results and results that reflect purchase accounting and the
Company’s current capital structure. The Company also presents
adjusted EBITDA because the Company believes analysts and investors
utilize these measures in analyzing its results. Adjusted EBITDA
measures the Company’s financial performance based on operational
factors that management can impact in the short-term, such as the
Company’s pricing strategies, volume, costs and expenses of the
organization, and it presents the Company’s financial performance
in a way that can be more easily compared to prior quarters or
fiscal years. EBITDA and adjusted EBITDA have limitations as
analytical tools. EBITDA measures do not represent net income
(loss) or cash flow from operations as those terms are defined by
GAAP and do not necessarily indicate whether cash flows will be
sufficient to fund cash needs. Adjusted EBITDA excludes the impact
of earnings or charges resulting from matters that we do not
consider indicative of our ongoing operations but that still affect
our net income. In particular, the Company’s formulation of
adjusted EBITDA allows adjustment for certain amounts that are
included in calculating net income (loss), however, these are
expenses that may recur, may vary and are difficult to predict. In
addition, these terms are not necessarily comparable to other
similarly titled captions of other companies due to the potential
inconsistencies in the method of calculation.
A reconciliation of historical non-GAAP metrics is included in the
Cleansing Materials. The Company does not provide a forward-looking
reconciliation of certain forward-looking non-GAAP metrics as the
amount and significance of special items required to develop
meaningful comparable GAAP financial measures cannot be estimated
at this time without unreasonable efforts. These special items
could be meaningful. The Company presents constant currency
information to provide a framework to assess how the Company’s
underlying businesses performance excluding the effect of foreign
currency rate fluctuations.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
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Exhibit Name
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104 |
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Cover Page Interactive Data File (formatted as inline
XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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AVAYA HOLDINGS CORP.
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Date: December 13, 2022
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By:
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/s/ Rebecca A. Roof
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Name:
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Rebecca A. Roof
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Title:
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Interim Chief Financial Officer
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