“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.
Avaya is likely to emerge with 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 total of just over $3.2 billion.
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.”
Avaya filed for bankruptcy in January, as it faced a $600 million interest payment thanks to debts arising from its $8.2 billion private equity buyout a decade ago.
The company’s revenue was flat and falling, with fourth quarter revenue down and a net loss for the whole year of $750 million.
Private equity groups Silver Lake and TPG Capital bought Avaya in 2007 for $8.2 billion, but Avaya took out loans after the deal and had to pay $400 million a year in interest. The company was created 20 years ago from the office equipment business of Lucent, and added bankrupt Nortel’s office equipment business in 2009 after a $900 million acquisition.
Now the company says it has a revised capital structure that 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.”