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Published: Sun, January 22, 2017
Economy | By Melissa Porter

Avaya files for Chapter 11 bankruptcy, won't sell contact center assets

Avaya files for Chapter 11 bankruptcy, won't sell contact center assets

TELECOMS OUTFIT firm Avaya has filed for U.S. chapter 11 bankruptcy as a way of restructuring its business.

Like many telcos, Avaya was hit hard by the advent of cloud technology and the industry's transition from hardware to software and services.

"Pursuing restructuring through chapter 11 will enable us to reduce Avaya's debt and interest expense, while providing increased financial flexibility to further invest in innovation and growth to enhance our market-leading competitive position", he said.

The Santa Clara, California-based company has been burdened by debt stemming from an $8.2 billion buyout in 2007 by private equity firms Silver Lake Partners LP and TPG Capital LP, with $600 million coming due in October.

"If they sell off contact center, I'm not sure how the rest of the business survives", Lazar said. This financing, according to Avaya, combined with the company's cash from operations, is expected to provide sufficient liquidity during the Chapter 11 cases to support its continuing business operations and minimize disruption.

"This is a critical step in our ongoing transformation to a successful software and services business", he said.

Avaya is choosing instead to focus on restructuring the company's debt, and has obtained a $725 million debtor-in-possession financing facility underwritten by Citibank. The company also announced a single SDK (software development kit) for integrating Equinox into productivity applications.

"This result mirrors worldwide performance, with global revenue reaching US$958 million, up US$76m from the previous quarter, and EBITDA increasing by 25.3 per cent to US$223m in the same period".

After months of financial uncertainty, Avaya has filed for Chapter 11 bankruptcy protection to restructure its debt and business.

Avaya has liabilities totaling about $1.5 billion stemming from its pension and other promised post-employment benefits.

"This result mirrors worldwide performance, with global revenue reaching US$958 million, up US$76m from the previous quarter, and EBITDA increasing by 25.3% to US$223m in the same period", the Avaya ANZ says. Avaya didn't make the move to cloud, messaging and mobility in a timely manner.

Fox believes that 2017 will see a major shift in Canadian telecom spend from the traditional top five players to newer entrants who will continue to take away market share as the platforms continue to evolve to application-oriented solutions hosted on virtual machines running on site or in hosted data centres.

Also, Avaya said it isn't planning to sell its call-center business because doing so "would not maximize value for Avaya's customers and all of its stakeholders".

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