Global telco Avaya filed for Chapter 11 protection yesterday. It’s believed to have a debt load of about $6.3 billion.
Last year Avaya failed to sell its call centres, and the company now says it will retain the business, as a sale would not maximise value for creditors or customers. Foreign affiliates aren't included in the US filing and will continue to operate as normal.
The Chapter 11 move gives Avaya time to focus on servicing its debts, and underlines the problems telecommunications companies are facing as they transition from hardware to software and services.
Avaya was a spin-off of Lucent Technologies in 2000 and became a private company in 2007 via a deal with Silver Lake and TPG Capital valued at $8.2 billion. In 2009, Avaya acquired Nortel Enterprise Solutions to expand into networking. Avaya's revenues fell to $958 million in the fourth quarter of 2016, from $1 billion a year earlier. The company posted a net loss of $750 million for the fiscal year.
Rufus Grig, Group Strategy Director for UK systems integrator and managed services provider Maintel, which recently received a Technical Excellence award from Avaya, sounded a positive note, saying 'I think it’s actually a positive thing for Avaya. It gives them the breathing space to sort out their debt position without the looming deadline.’
‘Maintel are continuing to, and expect to continue to, get full support from them. They’ll continue with R&D, they’ll continue releasing products and they’ll continue providing us and our customers support on the product lines. We expect to have a strong relationship with Avaya long into the future’.