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Court confirms Avaya reorganisation plan

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 30 Nov 2017
Avaya says it will emerge from self-imposed bankruptcy by the end of 2017.
Avaya says it will emerge from self-imposed bankruptcy by the end of 2017.

Unified communications company Avaya has announced the US bankruptcy court for the Southern District of New York has confirmed its second amended chapter 11 plan of reorganisation.

As a result, Avaya expects to emerge from self-imposed bankruptcy before the end of this year.

In January, the company announced it had commenced a formal proceeding to restructure its balance sheet to better position itself for the future.

It filed voluntary petitions under Chapter 11 of the US Bankruptcy Code, which allows for protection from creditors. It is given to a business in financial difficulties for a limited period to allow it to reorganise.

Avaya president and CEO Jim Chirico said at the time the change was critical in order for Avaya to be able to innovate and compete in the new digital economy.

"The court's approval of our plan is the culmination of months of hard work and extensive negotiations among our various stakeholders. 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," says Chirico.

Avaya projects to have approximately $2.925 billion of funded debt and a $300 million senior secured asset-based lending facility available upon emergence from chapter 11 protection, a substantial reduction from the approximately $6 billion of debt on its balance sheet when Avaya commenced its financial restructuring.

This revised capital structure is expected to result in more than $200 million in annual cash interest savings compared to fiscal year 2016.

"I want to thank our customers and partners for their continued support. The trust and loyalty of our global customer base and partner network have played a vital role in Avaya's success throughout this process," says Chirico.

"I also want to thank our dedicated and driven employees, who have remained focused on delivering the innovative solutions and service 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."

In October, Chirico said Avaya plans to compete aggressively when it emerges, by focusing on emerging technologies and simplifying the whole business.

He said Avaya will expand its global partner ecosystem, which already has over 130 000 customers in close to 250 000 customer locations.

Avaya will remain a portfolio company, which currently includes unified communications, call centres and services, and continue to invest in and build these capabilities, he noted.

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