Troubled communications group Avaya says it expects to emerge from the restructuring of its business by the end of this year after the United States Bankruptcy Court for the Southern District of New York confirmed its reorganisation plan.
Avaya moved into chapter 11 in January this year with almost US$6 billion in debt and plans to reduce that debt to US$2.9 billion.
And in August Avaya revealed a dip in revenue of US$1 million down to US$803 million for the third fiscal quarter which ended on June 30 compared to the prior quarter. Revenue year-over-year was down US$79 million which the company attributed to lower demand for products and services, primarily due to extended procurement cycles resulting from its chapter 11 bankruptcy protection filing in the US.
“The Court’s approval of our plan is the culmination of months of hard work and extensive negotiations among our various stakeholders,” said Jim Chirico, Avaya’s President and CEO.
{loadposition peter}“In the coming weeks, Avaya will emerge from this process stronger than ever and positioned for long-term success, with the financial flexibility to create even greater value for our customers, partners and stockholders.”
Avaya projects to have approximately US$2.925 billion of funded debt and a US$300 million senior secured asset-based lending facility available on emergence from chapter 11 protection, which Chirico says is a substantial reduction from the approximately $6 billion of debt on its balance sheet when Avaya commenced its financial restructuring.
The revised capital structure is expected to result in more than US$200 million in annual cash interest savings compared to fiscal year 2016.
“I want to thank our customers and partners for their continued support,” Chirico said. “The trust and loyalty of our global customer base and partner network have played a vital role in Avaya’s success throughout this process.”
“I also want to thank our dedicated and driven employees, who have remained focused on delivering the innovative solutions and industry-leading service that our customers expect from us. I look forward to working with our employees, customers and partners as we write the next chapter of the Avaya story.”