A US Bankruptcy Court has approved Avaya's restructuring plan and given it the green light to exit Chapter 11 before the end of the year. "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."
Avaya projects to have approximately $2.925bn of funded debt and a $300m senior secured asset-based lending facility available upon emergence from chapter 11 protection, a reduction from the circa $6bn of debt on its balance sheet when Avaya commenced its financial restructuring.
This revised capital structure is expected to result in more than $200m in annual cash interest savings compared to fiscal year 2016.
"The trust and loyalty of our global customer base and partner network have played a vital role in Avaya's success throughout this process," added Chirico.
"I look forward to working with our employees, customers and partners as we write the next chapter of the Avaya story."
Avaya's UK MD Ioan MacRae commented: "We've been planning and preparing for 10 months, and we're ready to emerge as a new and stronger company, one that is better positioned for long-term success.
"We're coming out of chapter 11 with a stronger cash flow. In fact we'll have $300m in cash because of reduced interest payments and pension obligations.
"The shackles are well and truly off. This is double our current R&D spending and so we have a lot more opportunity to invest in our unified communications and collaboration portfolio.
"That's not to mention the new sales and services capabilities and acquisitions that this freedom of investment opens the door to."
MacRae also noted that the process has enabled Avaya to streamline its operations.
"We are now a linear organisation focused on R&D and sales. Our technology platforms are stronger than ever. We've opened them up to make it simpler for our partners and customers to adopt and integrate disruptive technologies.
"Avaya UK has continued growth quarter upon quarter. We will be focusing on working alongside the rest of the global team to make changes for the future and maintain that strong growth."
Responding to the news Adept Telecom CEO Ian Fishwick said: "Avaya has always generated operating profits. Its issue was too much debt. It was obvious from the start that a debt restructuring would mean that the company just carried on as normal."
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