Home / / Avaya partners back Chapter 11 bankruptcy protection

Avaya partners back Chapter 11 bankruptcy protection

Channel partners are upbeat the vendor will emerge from this process strongly

Channel partners are pleased that Avaya will not sell off its Contact Centre business.
Channel partners are pleased that Avaya will not sell off its Contact Centre business.

Avaya channel partners in the Middle East have backed the vendor's Chapter 11 bankruptcy protection filing saying it is the right move to getting the company back on track and are relieved that the unified communications (UC) specialist has kept its Contact Centre business intact.

The company said in its filing on 19th January, 2017 that pursuing restructuring through chapter 11 will enable it to reduce Avaya's debt and interest expense.

Avaya stated that its foreign affiliates are not included in the filing and normal operations will continue in the Middle East and Africa (MEA).

"As an Avaya partner for many years in the GCC, we have been following these developments with keen interest ever since rumours first emerged in 2016," said a partner who spoke to Channel Middle East on condition of anonymity. "We are happy that this process does not affect Avaya's operations outside the US and the fact that the company is keenly focused on minimising disruption to its customers and partner ecosystem."

Channel partners are also relieved that Avaya will not sell off its Contact Centre business.

The company said as part of Avaya's comprehensive assessment of options to address its capital structure, the company evaluated expressions of interest in various assets, including its Contact Centre business. However, added Avaya, after extensive evaluation in consultation with its financial and legal advisors, the Avaya Board of Directors has determined that focusing on the company's debt structure is paramount and a sale of the Contact Centre business at this time would not maximise value for Avaya's customers and all of its stakeholders.

Avaya said it remains in ongoing negotiations to monetise certain other assets, as appropriate, to maximise value for all stakeholders.

"Avaya's prized possession and where the company is going to service most of its debt is the contact centre business," said one top executive from a Saudi Arabia-based solution provider business who resells Avaya solutions, who declined to be identified.

The solution provider said there is still value in Avaya's products and future roadmap.

"I don't think people quite understand the robustness and the saturation of the market presence that the Avaya platforms have in MEA," he said.

"This is a critical step in our ongoing transformation to a successful software and services business. Avaya's current capital structure is over 10 years old and was put in place to support our business model as a hardware-focused company, which has evolved significantly since that time," said Kevin Kennedy, CEO of Avaya in a statement.

Kennedy continued that: "Now, as a result of the terms of Avaya's debt obligations and the upcoming debt maturities, we need to recapitalise the company. Our business is performing well, and we are confident that we can emerge from this process stronger than ever, as this path is a reflection of our debt structure, not the strength of our operations or business model."

The company said it is operating its MEA business as usual and is fully committed to providing its customers and channel partners with the same innovative products and leading services.

In the FY2016 results Avaya had many highlights across the region. Networking reported double-digit growth, with big investment houses, real-estate companies, and oil and gas companies becoming Avaya networking customers for the first time last year.

The company added that it also saw significant interest in cloud, with many customers looking at its cloud service offerings. According to Avaya, the biggest client was Dnata, one of the world's largest air service providers, which is working with the vendor to power its customer service digital transformation strategy.

Avaya's debt burden has been following the UC specialist for nearly a decade since it was acquired for $8.2bn in 2007 from private equity firms Silver Lake Partners and TPG Capital.