Avaya granted $425m loan from US court
Avaya has successfully bid to tap into $425 million of a $725 million loan as it attempts to carry through a restructuring process following a bankruptcy filing.
The telecoms firm filed for Chapter 11 Bankruptcy last week, facing a $600 million interest payment on debts of around $6.3 billion, according to reports.
The company filed for bankruptcy after it failed in a bid to sell off its call centre business, and was unable to reach a deal with creditors.
The loan was extended by an affiliate of Citigroup earlier this year. According to Avaya lawyers, a significant portion of the $725 million was funded by existing lenders.
"The company has taken a decisive step to rightsize its balance sheet," Pat Nash, one of the company's attorneys, told Judge Stuart Bernstein at the US Bankruptcy Court for the Southern District of New York.
In a statement on 20 January, Avaya CEO Kevin Kennedy said the firm was looking to restructure after an in-depth review of ways to address its capital structure.
Chapter 11 of the US Bankruptcy Code allows companies time to restructure their balance sheet and try to survive. "Reducing the company’s current debt through the chapter 11 process will best position all of Avaya’s businesses for future success," said Kennedy.
Avaya was created in 1995 from the office equipment business of Lucent Technologies – which went on to become Alcatel-Lucent and is now owned by Nokia. In 2009, after the private equity takeover, the company bought the enterprise solutions business of bankrupt Nortel for $900 million.