Avaya’s regional president Nidal Abou-ltaif has said that the company’s looming emergence from Chapter 11 bankruptcy protection has given it a stronger understanding of its customers, and that its Middle East business had been strong in the run-up to the filing.
Avaya CEO Jim Chirico earlier announced that the United States Bankruptcy Court for the Southern District of New York (the Court) has confirmed its second amended chapter 11 plan of reorganisation.
As a result, the firm expects to emerge from its restructuring process before the end of this year.
The move follows the firm’s decision to file for Chapter 11 protection in the US Bankruptcy Court in January in a move to address issues with its capital structure.
Nidal Abou-ltaif, president of Avaya International, said that the last 10 months have been challenging for the firm, but have proven to be an important learning experience.
“It’s been a long, tough journey, but has made us stronger and opened our eyes to our customers’ needs,” Abou-ltaif said. “It’s helped us to pay more attention to our partner programmes, and helped us to understand our customers’ businesses better by working with their finance and compliance departments.”
Abou-ltaif said that the firm’s Middle East business had been “very healthy” in the run up to the filing, and that it had performed well given the political challenges it had faced. “Some markets were down, others were up,” he said. “Given the turbulence in the region and its emergence from the oil price collapse, things had been going well. Filing for restructuring was nothing to do with our global operations.”
He added that there were “two types” of reactions that he received from customers when the Chapter 11 news broke in January. “Some customers were concerned and needed convincing, others understood our situation,” he said. “Only a few wouldn’t offer us new projects due to compliance mandates. Others needed confirmation that we would stay on course, but there were no hostile meetings.”
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.
“The Court’s approval of our plan is the culmination of months of hard work and extensive negotiations among our various stakeholders,” Chirico said. “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.”
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,” 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,” Chirico continued. “I look forward to working with our employees, customers and partners as we write the next chapter of the Avaya story.”
Centerview Partners LLC and Zolfo Cooper LLC are Avaya’s financial and restructuring advisors and Kirkland & Ellis LLP is the company’s restructuring counsel.
