Avaya re-structures its re-structuring plan, also re-structures CEO
COO Jim Chirico to take control with debt down by over $3bn, revenue flat, outlook mixed
Avaya's revealed a re-structured re-structuring plan and a new CEO.
The company availed itself of Chapter 11 bankruptcy protection in January 2017, in order to re-finance debt it took on when going private back in 2007.
By April the company revealed a “plan of reorganization” that it said would mean “pre-filing debt will be reduced by more than US$4 billion” after “a debt-for-equity exchange, in which certain secured creditors would acquire 100 percent of reorganized Avaya’s equity”.
Fast forward to Monday August 7th and the company now says an amended plan's been agreed by “holders of over 50% of its first lien debt”. The deal will reduce its debt by more than US$3bn. Also helping matters is a settlement of its underfunded pension plans, responsibility for which will be assumed by the U.S. Pension Benefit Guaranty Corporation in return for equity in Avaya and some cash.
August 23rd is now the key date for the company, as on that day a court hearing should rubber-stamp the re-structuring and set a date for Avaya to resume trading outside of bankruptcy protection.
The company says that will take place in “Fall”, but The Register imagines it is aiming for October 1st as that's the day on which the company's current chief operating officer Jim Chirico will step up to become chief executive officer. The current president and CEO, Kevin Kennedy, who will also leave the board but remain available as an advisor.
Avaya says the change is an execution of its succession plan, rather than an outright execution, and that Kennedy has done all he can to get Avaya ready to operate as a software company.
Chirico will inherit a company that, according to preliminary unaudited financial results released Monday, had revenue of US$802m to $804m for the quarter ended June 20th, 2017. That's down nine per cent on the same quarter in 2016, but with decent EBITDA of between $202m and $206m.
The company will be out of the networking business and focussed on software and services for the contact centre and collaboration applications. The former is a decently-sized niche, albeit one challenged by the emergence of new online customer service channels. The latter is a hotly-contested market with Microsoft and Cisco going at it hammer and tongs, with Mitel rated by Gartner's magic quadrant for the field as the only other leader. Avaya's rated a visionary, with NEC and Huawei labelled challengers. ®