“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. “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.”
The plan provides holders of first-lien debt with 90.5 percent of stock in the reorganised company and holders of second-lien notes with a pro rata share of 4 percent of stock and warrants for an additional 5.1 percent of the shares.
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.
Avaya expects to have an enterprise value of $5.7 billion.
“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.”
In May, Avaya won court approval to sell its networking business to Extreme Networks Inc in a deal worth up to $100 million.
“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,” Chirico continued. “I look forward to working with our employees, customers and partners as we write the next chapter of the Avaya story.”
During its bankruptcy, Avaya terminated its salaried pension plan, which includes about 1,000 active employees and 7,000 retirees. The PBGC took over the plan which the agency claimed was underfunded by $1.2 billion.