Avaya prices $2.93B term loan, gets ready to exit Chapter 11 protection

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The revised capital structure is expected to result in more than $200 million in annual cash interest savings compared to fiscal year 2016.

Avaya has secured a $2.9 billion senior secured term loan, making another step forward with its financial recovery plan. 

By securing this term loan, Avaya said it will have a simplified, single-tranche long-term debt capitalization structure when it emerges out of Chapter 11.

“The successful upsize and pricing of this senior secured term loan is a very important step in our emergence from Chapter 11, simplifies our capital structure and strengthens Avaya’s ability to pursue future growth opportunities,” said Jim Chirico, Avaya’s president and CEO, in a release.

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The revised capital structure is expected to result in more than $200 million in annual cash interest savings compared to fiscal year 2016. The term loan will mature in 2024 and bear interest at a rate of Libor plus 4.75% per year, with a 1% Libor floor.

Goldman Sachs Bank USA served as administrative agent, syndication agent, joint lead arranger and joint bookrunner, along with Citigroup Global Markets, Barclays Bank PLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities as joint lead arrangers and joint bookrunners arranged the facility.

Centerview Partners LLC and Zolfo Cooper LLC are Avaya's financial and restructuring advisors, and Kirkland & Ellis LLP is Avaya’s restructuring counsel.

On Nov. 28, a hearing to consider Avaya’s reorganization plan will be held. The funding and closing of the term loan is expected to occur in December 2017, concurrent with the anticipated effective date of Avaya’s Plan of Reorganization.

Avaya will use the proceeds from the term loan will be used to support its emergence from Chapter 11. 

Gaining this new funding is just one part of Avaya’s process to restructure the company’s finances. Earlier this year, the vendor reached an agreement to sell its networking business to Extreme Networks for $100 million.