Secures Approximately $780 Million in Committed
Financing; New Capital Will Accelerate Investment in Avaya’s
Leading Cloud Communications Portfolio
Enters Agreement to Eliminate More Than 75% of
Debt and Substantially Increase Cash and Liquidity
Initiates Expedited, Prepackaged Financial
Restructuring via Chapter 11 with Overwhelming Support of Financial
Stakeholders
Expects to Complete Process in 60 to 90 Days;
Paying Vendors and Suppliers in Full and Paying Employees as
Usual
Extends and Expands Strategic Partnership with
RingCentral to Build on Success of Avaya Cloud Office® by
RingCentral
Avaya Holdings Corp. (NYSE: AVYA) (“Avaya” or the “Company”), a
global leader in solutions to enhance and simplify communications
and collaboration, today announced that it has entered into a
Restructuring Support Agreement (the “Financial Restructuring”)
with overwhelming support of more than 90% of the Company’s secured
lenders (the “Investor Group”). Implementing the Financial
Restructuring will accelerate Avaya’s 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 Financial Restructuring will reduce the Company’s
total debt by more than 75%, from approximately $3.4 billion today
to approximately $800 million. Additionally, it will substantially
increase Avaya’s cash and strengthen its liquidity position,
resulting in an expected emergence balance sheet with less than 1x
net leverage. Due to the overwhelming support of its financial
stakeholders, the Company expects to implement the Financial
Restructuring on an expedited basis and complete this comprehensive
balance sheet de-leveraging within 60 to 90 days. These actions
will not impact the Company’s customers, channel and strategic
partners, suppliers, vendors or employees.
Alan Masarek, Avaya’s Chief Executive Officer, said, “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. 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. Strengthening Avaya’s capital structure is a critical
step to fully realize our transformation, and we are excited to
move ahead as a well-capitalized company with one of the strongest
balance sheets in our industry that includes substantial cash to
invest in our own success.”
With substantially improved financial flexibility, the Company
will accelerate its investment in innovative communications
products, solutions and services for customers, including the Avaya
Experience Platform, its cloud-based Contact Center offering.
Mr. Masarek continued, “We appreciate the strong support from
our investors, who recognize the incredible value in Avaya’s
business, brand and opportunities ahead. I also thank our customers
and partners for their continued trust, as well as Avaya’s team
members for their unwavering focus on providing exceptional service
and support to those we serve. 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.”
To efficiently implement the Financial Restructuring, Avaya and
all of its U.S. subsidiaries today filed voluntary prepackaged
Chapter 11 cases in the U.S. Bankruptcy Court for the Southern
District of Texas. During this process, Avaya will continue serving
its customers and partners without interruption and providing them
with outstanding communications solutions, service and support as
usual.
The Company has received commitments for $628 million in
debtor-in-possession (“DIP”) financing, including a $500 million
new-money term loan from the Investor Group led by Apollo Global
Management, Inc. and Brigade Capital Management, LP, among others,
and a $128 million ABL facility from a bank syndicate led by Citi.
Upon Avaya’s emergence from the court-supervised process, the $500
million new-money term loan and $128 million ABL facility will roll
into exit facilities. Additionally, as part of the Financial
Restructuring, certain members of the Investor Group have committed
to provide $150 million of additional new-money financing through a
fully backstopped debt rights offering at exit. This new committed
financing of approximately $780 million, together with cash on hand
and cash generated from ongoing operations, is expected to provide
substantial liquidity to support Avaya during the restructuring
process and beyond.
Avaya has filed a number of customary motions with the court to
support its operations during the court-supervised process,
including the continued payment of employee wages and benefits
without interruption. Pursuant to the terms of the Financial
Restructuring, all of the Company’s vendors and suppliers will be
paid in full, regardless of when goods or services were delivered.
Vendors and suppliers to Avaya’s non-U.S. subsidiaries will
continue to be paid in the ordinary course.
Expansion of Global, Strategic Partnership with
RingCentral
Avaya also announced today that it has extended and expanded its
global, strategic partnership with RingCentral, Inc., which was
formed in 2019 to introduce and launch Avaya Cloud Office® by
RingCentral (“Avaya Cloud Office”).
Avaya will continue to act as the exclusive sales agent for
direct and partner sales of Avaya Cloud Office, Avaya’s exclusive
multi-tenanted cloud PBX solution, in the geographies where it is
available. The partnership has also expanded to include additional
go-to-market constructs that enable Avaya to sell Avaya Cloud
Office to its installed base on a direct basis. In addition, Avaya
will be compensated in cash as Avaya Cloud Office seats are sold
and, in connection with the Financial Restructuring, RingCentral’s
preferred stock in Avaya will be eliminated.
Mr. Masarek added, “We are pleased to extend, expand and enhance
our partnership with RingCentral, which provides Avaya an efficient
way to deliver a market-leading multi-tenanted cloud PBX offering
to our customers as part of our broader suite of communications
solutions. We look forward to building on the Avaya Cloud Office
footprint and continuing to support the adoption of seamless cloud
functionality by our global customers at a pace that meets their
business needs.”
Additional Information
Additional information regarding the Company’s court-supervised
process is available at www.AvayaRestructuringInfo.com. Court
filings and other information related to the proceedings are
available on a separate website administrated by the Company’s
claims agent, Kurtzman Carson Consultants (KCC), at
www.kccllc.net/avaya, or by calling KCC toll-free at 877-709-4751,
or 424-236–7231 for calls originating outside of the U.S. or
Canada.
Advisors
Kirkland & Ellis LLP is serving as legal counsel to Avaya,
Evercore Group L.L.C. is serving as financial advisor and
AlixPartners, LLP is serving as restructuring advisor.
Akin Gump Strauss Hauer & Feld LLP, Centerview Partners LLC
and Alvarez & Marsal LLP are serving as legal counsel,
investment banker and financial advisor, respectively, to an ad hoc
group of Avaya’s first lien lenders. Paul, Weiss, Rifkind, Wharton
& Garrison LLP is serving as legal counsel and FTI Consulting,
Inc. is serving as financial advisor to an ad hoc group of Avaya’s
first lien lenders. Debevoise & Plimpton LLP is serving as
legal counsel to certain holders of Avaya’s secured exchangeable
notes.
About Avaya
Businesses are built by the experiences they provide, and every
day millions of those experiences are delivered by Avaya Holdings
Corp. (NYSE: AVYA). Avaya is shaping the future of customer
experiences, with innovation and partnerships that deliver
game-changing business benefits. Our communications solutions power
immersive, personalized, and memorable customer experiences to help
organizations achieve their strategic ambitions and desired
outcomes. Together, we are committed to helping grow your business
by delivering Experiences That Matter. Learn more at
http://www.avaya.com.
Cautionary Statement Regarding Forward-Looking
Information
This press release contains certain “forward-looking
statements.” All statements other than statements of historical
fact 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: risks attendant to the bankruptcy
process, including the Company’s ability to obtain court approval
from the Bankruptcy Court with respect to motions or other requests
made to the Bankruptcy Court throughout the course of the Chapter
11 cases (the “Chapter 11 Cases”), including with respect to any
proposed debtor-in-possession financing; the ability of the Company
to negotiate, develop, confirm and successfully consummate a plan
of reorganization; the effects of the Chapter 11 Cases, including
increased legal and other professional costs necessary to execute
the Company’s reorganization, on the Company’s liquidity (including
the availability of operating capital during the pendency of the
Chapter 11 Cases), results of operations or business prospects; the
effects of the Chapter 11 Cases on the interests of various
constituents and financial stakeholders; the length of time that
the Company will operate under Chapter 11 protection and the
continued availability of operating capital during the pendency of
the Chapter 11 Cases; objections to the Company’s restructuring
process, DIP financing, or other pleadings filed that could
protract the Chapter 11 Cases; risks associated with third-party
motions in the Chapter 11 Cases; Bankruptcy Court rulings in the
Chapter 11 Cases and the outcome of the Chapter 11 Cases in
general; conditions to which any debtor-in-possession financing is
subject and the risk that these conditions may not be satisfied for
various reasons, including for reasons outside the Company’s
control; employee attrition and the Company’s ability to retain
senior management and other key personnel due to the distractions
and uncertainties; the Company’s ability to maintain relationships
with suppliers, customers, employees and other third parties and
regulatory authorities as a result of the Chapter 11 Cases; the
impact and timing of any cost-savings measures and related local
law requirements in various jurisdictions; finalization of the
Company’s annual and quarterly financial statements (including
finalization of the Company’s impairment tests), completion of
standard annual and quarterly-close processes; risks relating to
the delisting of the Company’s common stock from the New York Stock
Exchange and future quotation of the Company’s common stock; 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; and other factors
discussed in the Company’s Annual Report on Form 10-K and
subsequent quarterly reports on Form 10-Q filed with the U.S.
Securities and Exchange Commission (“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 the
Company’s 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.
Source: Avaya Newsroom
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230213005689/en/
Media Inquiries Meaghan Repko / Aura Reinhard / Andrew
Squire Joele Frank, Wilkinson Brimmer Katcher (212) 355-4449
Investor Inquiries Tyler Chambers investors@avaya.com
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