Avaya is reportedly ‘in talks to hand control to lenders’ ahead of potential bankruptcy.
As UC Today reported in mid-December, Avaya is facing Chapter 11 reorganisation proceedings for the second time.
RingCentral also recently nominated financial restructuring, mergers and acquisitions expert Jill Frizzley to Avaya’s Board of Directors.
Sources close to the negotiations — reports Bloomberg— have said bankruptcy filing could come ‘by the end of January’ while the apparent talks are ongoing with reported investors Apollo Global Management, Ares Management and Invesco.
The rumoured investors are apparently first liens and have the right to remove assets before others: if debts are not paid.
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The supposed talks may extend to debtor-in-possession financing to fund the firm while in bankruptcy. Resulting financial security moves could help ease investor concerns over Avaya’s recent troubled history.
Avaya’s shares fell nearly 97% in 2022, reducing its market cap to around $45 million when two years ago, it was a whopping $2 billion.
In September, it was announced Avaya expected $26m in costs for cutting jobs. Conversely, the telecommunications firm expects to make substantial savings. In an SEC filing, Avaya stated: “The Company estimates that it will incur approximately $23 million to $26 million in pre-tax restructuring charges, all of which are expected to be in the form of cash-based expenditures and substantially all of which are expected to be related to employee severance and other termination benefits.”
During a financial crisis in July, Avaya fired its CEO Jim Chirico and was replaced by ex-Vonage boss Alan Masarek.
When Masarek took over as CEO, he said: “Avaya benefits from an industry-leading brand, world-class customer base and global reach, a rich history of innovation and strong partner ecosystem.”
He stated his intentions: “I undertake a comprehensive strategic and operating review of all facets of the business with the goal of delivering industry-leading solutions to our global customers and enhancing value for all stakeholders.”
In August, Avaya’s shares plunged 21%due to a loss in Q3. Alongside its quarterly statement the previous month, Masarek responded: “Our preliminary financial results for the quarter reflect operational and execution shortcomings, amplified against the backdrop of a volatile economic environment. We are taking aggressive actions to right-size Avaya’s cost structure to align with our contractual, recurring revenue business model.”
By early August, Avaya reported a net loss of $1.408 billion. In its third-quarter results it forecasted sales of $575 million to $580 million, below previous guidance. Analysts expected $604 million, a miss of around $125m.
In October, Avaya made several key announcements at the GITEX 2022 conference in Dubai. Among those was for “executing on Dubai’s metaverse vision” through its ‘Metaverse Experience’, where it was preparing customers for moving to the metaverse. The Avaya metaverse solution was developed in collaboration with Avanza.
Nidal Abou-Ltaif, President Avaya International, spoke about Avaya’s plans for the metaverse and stated: “This kind of innovation without disruption will help businesses of any size become a part of Dubai’s Metaverse vision.”
