NEWS & EVENTS
Avaya Files Plan of Reorganization and Disclosure Statement
NEW YORK, NY – April 13, 2017 – Avaya today announced that it has filed a chapter 11 plan of reorganization (the “Plan”) and related disclosure statement (“Disclosure Statement”) with the United States Bankruptcy Court for the Southern District of New York (the “Court”). The Plan outlines a path to significantly reduce Avaya’s pre-filing debt, which would strengthen the Company’s balance sheet, improve financial flexibility and position it for long-term success.
“We are pleased to have filed the Plan, which is a crucial step forward in our effort to recapitalize Avaya’s balance sheet and create a stronger and healthier company that can create even more value for our customers,” said Kevin Kennedy, Chief Executive Officer of Avaya. “We look forward to working closely with all stakeholders over the coming weeks and months to refine the Plan and build consensus.”
Under the proposed Plan, which will continue to evolve as Avaya works toward creditor consensus and confirmation by the Court, among other things, the following items are contemplated:
- Avaya’s pre-filing debt will be reduced by more than $4 billion;
- Avaya’s restructuring will be achieved through a debt-for-equity exchange, in which certain secured creditors would acquire 100 percent of reorganized Avaya’s equity;
- Avaya’s general unsecured creditors will share pro rata in a cash pool;
- Avaya will continue to honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya’s pension obligations, following its emergence from bankruptcy; and
- Avaya will continue to honor and assume its two collective bargaining agreements and all related agreements.
Avaya has requested that the Court schedule a hearing on May 25th to consider approval of the Disclosure Statement related to the Plan. Following Court approval of the Disclosure Statement, Avaya will distribute the Plan and Disclosure Statement to voting creditors for their consideration.
Kennedy added, “Our normal business operations are running well, and we continue to sign significant customer renewals and new customer contracts. In addition, the Company’s consolidated balance sheet now has more than $750 million in cash, reflecting DIP financing proceeds and positive cash flow from operations. We remain confident in our ability to maximize value for all of our stakeholders and to complete our balance sheet restructuring as soon as reasonably possible.”
This press release is not intended as solicitation for a vote on the Plan. The full terms of the Plan and Disclosure Statement, as well as the related pleadings, are available online at: https://cases.primeclerk.com/avaya.
Centerview Partners LLC and Zolfo Cooper Management, LLC are Avaya’s financial and restructuring advisors and Kirkland & Ellis LLP is the Company’s restructuring counsel.
Avaya enables the mission critical, real-time communication applications of the world’s most important operations. As the global leader in delivering superior communications experiences, Avaya provides the most complete portfolio of software and services for contact center and unified communications with integrated, secure networking— offered on premises, in the cloud, or a hybrid. Today’s digital world requires some form of communications enablement, and no other company is better positioned to do this than Avaya. For more information, please visit www.avaya.com.
Cautionary Note Regarding the Chapter 11 Cases
The Company’s security holders are cautioned that trading in securities of the Company during the pendency of these Chapter 11 cases will be highly speculative and will pose substantial risks. It is possible some or all of the Company’s currently outstanding securities may be cancelled and extinguished upon confirmation of a restructuring plan by the Bankruptcy Court. In such an event, the Company’s security holders would not be entitled to receive or retain any cash, securities or other property on account of their cancelled securities. Trading prices for the Company’s securities may bear little or no relation to actual recovery, if any, by holders thereof in the Company’s Chapter 11 cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.
Cautionary Note Regarding Forward-Looking Statements
This document contains certain forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or other comparable terminology and include, but are not limited to, statements regarding the amount of pre-petition debt reduction the Company can achieve with a restructuring plan, the manner in which the restructuring will be achieved, the treatment of the qualified pension plans and collective bargaining agreements in the restructuring, the Company’s expected motions to be filed in the Chapter 11 proceeding and the dispositions of such motions, continued operations and customer and supplier programs while in a Chapter 11 proceeding, and cash needed to support our operations while in a Chapter 11 proceeding. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control, including, but not limited to: the actions and decisions of our creditors and other third parties with interests in the Chapter 11 cases; our ability to maintain liquidity to fund our operations during the Chapter 11 cases; our ability to obtain Bankruptcy Court approvals in connection with the Chapter 11 cases; our ability to consummate any transactions once approved by the Bankruptcy Court and the time to consummation of such transactions; adjustments in the calculation of financial results for the quarter or year end, or the application of accounting principles; discovery of new information that alters expectations about financial results or impacts valuation methodologies underlying financial results; accounting changes required by United States generally accepted accounting principles; and other factors affecting the Company detailed from time to time in the Company’s filings with the SEC that are available at www.sec.gov. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. For a list and description of such risks and uncertainties, please refer to Avaya's filings with the SEC that are available at www.sec.gov and in particular, our 2015 Form 10-K filed with the SEC on November 23, 2015. We caution you that the list of important factors included in our SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this document may not in fact occur. Avaya disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.
Sard Verbinnen & Co
John Christiansen / David Isaacs / Leah Polito