Avaya has revealed its steps toward exiting Chapter 11 bankruptcy, including the appointment of a new chief executive, agreements with priority creditors and a debt reduction of more than US$3 billion.
The unified communications vendor announced overnight that it had entered into a plan support agreement (PSA) with more than 50 percent of the holders of its “first lien debt”. Negotiations with Avaya creditors of the "ad hoc group of first lien creditors" have led to an agreement to wipe more than US$3 billion from the vendor’s debts.
Additionally, the company struck a deal with the US Pension Benefit Guaranty Corporation (PBGC), which will take on the obligations of Avaya’s staff pension plan in the US.
The vendor expects to emerge from Chapter 11 as a public company “in the near term” after reaching agreements with key stakeholders in its restructuring process, according to chief executive Kevin Kennedy,
“We are very pleased to have reached these agreements with these key stakeholders in our restructuring process, the ad hoc first lien group and PBGC,” Kennedy said.
“This is an important milestone in the Chapter 11 process and marks Avaya’s progress toward our goal of emerging a stronger, more competitive company.”
Avaya will seek to have its proposal approved and gain the support of other stakeholders at its scheduled court hearing later this month.
Avaya also revealed the appointment of current chief operating officer and global sales leader Jim Chirico to the position of chief executive office, effective October, with current CEO Kevin Kennedy to retire from both the position and the board of directors.
Avaya Australia & New Zealand managing director Peter Chidiac said the the local businesses had progressed strongly despite the troubles at head office, but that the announcements represented an important milestone overall.
“Over the last two years, we have been vocal about the transformation of the A/NZ business; we recognised the need to restructure in order to align to the demands of the A/NZ market and deliver software and services that local organisations need and ensure the success of our customers,” he said.
“The transformation is proving positive – last year we reported that Avaya A/NZ closed its fiscal 2016 with its strongest quarter in 12 quarters, and the business has continued to build from there. I am pleased to note this progress has continued, with the local business to date.
“We take great pride with the level of confidence and support that we continue seeing from our customers and partners in ANZ."
Globally, Avaya revealed its third-quarter 2017 financial year results and expects revenues to be between US$802 million and US$804 million, or a 9 percent decline on the same period last year. It expects adjusted EBITDA to fall within the range of US$202 million and US$206 million, constituting 25.1 percent or 25.7 percent of revenue.
Avaya confirmed in January it had filed for Chapter 11 bankruptcy, revealing US$6 billion in debt. It since offloaded its networking business to Extreme Networks for US$100 million.