AVYA - Avaya files bankruptcy draws $780M in new financing

Avaya Holdings ( NYSE: AVYA ) has filed for Chapter 11 bankruptcy , pursuing a prepackaged plan to cut its debt and shore up the balance sheet as it had signaled in recent weeks .

The company's Restructuring Support Agreement has support of more than 90% of the company's secured lenders, it says, adding that should allow for an expedited restructuring it can complete in 60-90 days with no disruption to paying vendors, suppliers or employees.

The move will cut total debt by more than 75% - to about $800M from a current $3.4B. The resulting balance sheet will have less than 1x net leverage, Avaya said.

It's received commitments for $628M in debtor-in-possession financing, including a $500M new-money term loan, and a $128M ABL facility - both of which will roll into exit facilities once the restructuring is complete.

Some in the investor group have committed $150M in additional new-money financing at exit, meaning a total committed financing of $780M.

Avaya also said it's extended and expanded its partnership with RingCentral ( NYSE: RNG ). It will continue to act as the exclusive sales agent for direct and partner sales of Avaya Cloud Office, and be compensated in cash as those seats are sold.

"Strengthening Avaya’s capital structure is a critical step to fully realize our transformation, and we are excited to move ahead as a well-capitalized company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success," said Avaya CEO Alan Masarek.

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