Avaya has reached agreement with a majority of debtholders on a new restructuring plan to help the company emerge from chapter 11 bankruptcy protection in the US. The company also announced the promotion of COO Jim Chirico as CEO, replacing Kevin Kennedy.
Avaya said holders of over 50 percent of its first lien debt, some of which formed their own ad hoc committee of creditors, had agreed to the plan. In addition, the US government Pension Benefit Guaranty Corporation will take over the company's obligations under the Avaya Pension Plan for Salaried Employees. Avaya will continue to support its obligations under the other Avaya Pension Plan.
Implementation of the plan remains subject to court approval, with a hearing scheduled for 23 August. If approved, Avaya said it should be able to end its chapter 11 protection "in the near term".
The debt deal comes with a change in leadership. Kennedy is stepping down from October, after over eight years as CEO. Chirico has been at Avaya for a similar period, and has held a variety of positions at the company. As COO and Global Sales Leader, he is responsible for Operations, Global Sales, Sales Operations, Human Resources and Quality. He previously worked at Seagate and spent 17 years at IBM, including running its network division.
Avaya also released preliminary results for its fiscal third quarter to June, showing revenues roughly flat versus the previous quarter and down 9 percent year-on-year to USD 802-804 million. Adjusted EBITDA is expected at USD 202-206 million, or 25.1-25.7 percent of revenue, better than the 24.8 percent in the previous quarter. The company said it had positive operating cash flow and finished June with USD 729 million in cash. This does not include the USD 70 million received in mid-July for the sale of its networking assets.
