Avaya Ready to Sell Off Contact Center Business?
Latest reports out of the financial press suggest Avaya is close to offloading its contact center business and potentially heading into bankruptcy.
As we inch closer to year's end and Avaya's financial situation remains as difficult as ever, speculation has once again surfaced about the company's future -- with the latest report suggesting the company is considering filing for bankruptcy and selling off its contact center business.
Citing sources familiar with the situation, The Wall Street Journal reported on Wednesday that Avaya could file for Chapter 11 bankruptcy protection as soon as December. The filing would likely follow the sell-off of its contact center business, WSJ reported.
Regular No Jitter readers and Avaya watchers will recall that rumors had surfaced in August that Avaya was in fact shopping around its contact center business, with Genesys a reported buyer. That turned out not to materialize, however, with Genesys instead picking up Interactive Intelligence (see related article, Avaya Angst Must Come to an End."
Now it seems the contact center business could be destined for private equity hands, with the WSJ sources indicating that Clayton Dubilier & Rice (CB&R) is a top contender, having taken part in the most-recent round of bidding for that business. Avaya has been in search of a way out of its debt-heavy financial jam for some time, and announced at the time of its second-quarter earnings call that it had retained Goldman Sachs to explore asset sales, and CenterView Partners to evaluate its capital structure.
As reported at the time, Avaya must deal with several upcoming debt maturities, with $600 million due in October 2017, an additional $5.3 billion maturing in the 2018-2021 timeframe. Selling off the contact center business would net Avaya about $4 billion, which it could put toward repaying "some of its senior debt," WSJ sources reported.
Once Avaya emerged from bankruptcy, "other creditors could swap debt for ownership in a reorganized company," the sources told WSJ.
As for the restructuring plan, much of that "remains unclear" but "could take shape in negotiations with creditors ... in the coming weeks," WSJ reported.