The Company intends to use $22.4 million of the proceeds from this offering to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds received by the Company from the warrant transactions described below) and for general corporate purposes. The closing of the convertible notes is expected to take place on June 11, 2018 and is subject to customary closing conditions.
In connection with the pricing of the convertible notes, the Company entered into convertible note hedge transactions with Barclays Bank PLC, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC (the “Call Spread Counterparties”), in order to offset any amount the Company is required to pay or deliver in excess of the principal amount upon conversion of the convertible notes. The Company also entered into separate warrant transactions with the Call Spread Counterparties, which would have a dilutive effect with respect to the Company’s common stock to the extent that the market price of the Company’s common stock, as measured under the terms of the warrant transactions, exceeds the applicable strike price of the warrants on their exercise dates. The warrant strike price represents a premium of approximately 75.0% to the NYSE closing price of Avaya’s common stock on the date hereof.
If the initial purchasers exercise their option to purchase additional convertible notes, the Company expects to enter into additional convertible note hedge transactions and additional warrant transactions with the Call Spread Counterparties on terms similar to those described above.
The Company has been advised by the Call Spread Counterparties that, in connection with establishing their initial hedge positions with respect to the convertible note hedge transactions and the warrant transactions, the Call Spread Counterparties and/or their respective affiliates expect to enter into various derivative transactions with respect to the Company’s common stock concurrently with or shortly after the pricing of the convertible notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the convertible notes at that time.
In addition, the Company has been advised that the Call Spread Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling shares of the Company’s common stock or other securities of the Company in secondary market transactions following the pricing of the convertible notes and prior to the maturity of the convertible notes, which could adversely affect the market price of the Company’s common stock and, as a result, the market price of the convertible notes, or could have the effect of increasing or preventing a decline in the market price of the Company’s common stock.
Avaya is a global leader in digital communications software, services and devices for businesses of all sizes. Our open, intelligent and customizable solutions for contact centers and unified communications offer the flexibility of Cloud, on-premises and hybrid deployments. Avaya shapes intelligent connections and creates seamless communication experiences for our customers, and their customers. Our professional planning, support and management services teams help optimize solutions, for highly reliable and efficient deployments. Avaya Holdings Corp. is traded on the NYSE under the ticker AVYA.
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