Mitel is progressing through its financial restructuring process. The U.S. Bankruptcy Court for the Southern District of Texas has formally approved the Company’s prepackaged plan which should see the company emerge from Chapter 11 this quarter.
News first broke of Mitel’s Chapter 11 in March, and at the time reportedly designed to proactively optimize Mitel’s capital structure and reduce its debt burden in the face of higher interest rates.
Tarun Loomba, President and CEO of Mitel commented, “With a more efficient capital structure in place, we’re well-positioned to accelerate growth and sharpen our focus on delivering flexible, secure, and mission-critical communications solutions. We look forward to completing this process in the near term and to emerging as an even stronger vendor, employer, and business partner—continuing our leadership in hybrid communications for years to come.”
Once finalized, the Plan will eliminate approximately $1.15 billion of debt and lower Mitel’s annual cash interest payments by roughly $135 million. The Company will also secure $64.5 million in exit financing to support its operations and growth initiatives post-restructuring.
I spoke to Zeus Kerravala, Principal Analyst at ZK Research, recently about the big themes from Enterprise Connect, including how he views Mitel’s journey into debt restructuring.
When viewed in the context of the numbers above, it is clear why Mitel has grasped the opportunity to restructure its finances. Although competitors jumped on the market opportunity the news presented, Mitel still managed to launch its CX platform at the recent Enterprise Connect conference.
UC Today caught up with Mitel Partner Charterhouse Voice and Data recently to talk about what the restructuring means for customers. James Banks, Group Technical Director, commented “Maybe it’s an opportunity to reevaluate what you’ve got in place and maybe look at the roadmap. At the end of that process, if you’ve got Mitel deployed today for 500, 1,000, 10,000 users, there’s every chance, based on assessing the wider market, that it’s still relevant and will offer some value.”
What Happens Next?
Once Mitel emerges from Chapter 11 they will be a healthier business, but does that put it into a position to thrive? We have seen the fallout from other businesses that have gone through similar processes, i.e. Avaya, which has led to years of steady decline as they struggled to meet the renewed needs of their customers. Like Avaya, Mitel is investing heavily in its new CX platform with AI-embedded tools and workflows. However, is it too little too late? Stay tuned for more updates on UC Today as the situation unfolds.
