Avaya emerges from Chapter 11 after restructure
Troubled communications vendor is back less than a year after it filed for Chapter 11 bankruptcy protection
Avaya has announced the successful completion of its debt restructure almost a year after the troubled network and communications vendor filed for Chapter 11 bankruptcy.
The restructure saw Avaya offload a number of assets, including its core networking business which was sold to Extreme Networks for $100 million, as it looked to strengthen its balance sheet – something CEO and president Jim Chirico said has now been achieved.
“This is the beginning of an important new chapter for Avaya,” said Chirico. “In less than a year since the commencement of our chapter 11 restructuring, Avaya has emerged as a publicly traded company with a significantly strengthened balance sheet.”
The firm reduced its prior debt load by around $3 billion, he added, emerging from Chapter 11 with more than $300 million worth of cash on its balance sheet. Annual cash flow is also expected to be around $300 million better off. It also appointed a new CFO in October.
Avaya was created in 1995 from the office equipment business of Lucent Technologies – which went on to become Alcatel-Lucent and is now owned by Nokia. In 2009, after a private equity takeover, the company bought the enterprise solutions business of bankrupt Nortel for $900 million.
Avaya filed for Chapter 11 bankruptcy in January as its debts hit $6.3 billion, with revenue flat and falling. It faced a $600 million interest payment, with the decision taken to restructure the company.
Avaya will now focus on its core contact centre and unified communications market, aiming to transform into a software, services and cloud solutions provider. It is now taking steps in preparation to list on the New York Stock Exchange, the company announce.
Chirico added: “With a new Board and leadership team firmly in place, Avaya is now well-positioned to execute on its growth plan and deliver the returns and value expected by our stakeholders.”