News came over the Holiday weekend of the shaky future Avaya might be facing. Reports from the Wall Street Journal are coming in that the Unified Communications company is considering a chapter 11 bankruptcy filing, and is even coming close to a deal to sell off its entire call-center solution. This all comes after years of losses and a final effort to reconcile the heavy debt that’s followed.
A New Chapter For Avaya
The Wall Street Journal reported that sources close to the matter stated that Avaya could file for a chapter 11 protection within the next month or so, but would only come after the company manages to finalize a deal to sell their call-center software.
A multinational company, and ranked at #101 on Forbes America's Largest Private Companies list, this could be quite a big deal for a large number of businesses and contact centers relying on Avaya's call center solution, let alone any other cloud service the Unified Communications provider hosts. If your company relies on Avaya, well it might be time to look into some of the call center alternatives.
Their Heavy Debt
We’ve known for quite some time now that Avaya was in a bit of a rough spot, and with the year’s end approaching fast, things are only going to get a bit more squirrely. Avaya is currently facing multiple upcoming debt maturities, including $600 million due in October 2017, as well as $5.3 billion in the 2018-2012 timeframe. Essentially, Avaya has been holding on to close to $6 billion in debt as of June 30, based on a regulatory filing.
While those numbers certainly are big and scary, the Wall Street Journal reported sources stated that the potential sale of the company’s contact center software could net Avaya around $4 billion. Still short of their $6 billion figure, other creditors could potential swap the company’s debt for partial ownership in a reorganized company following their bankruptcy.
A Rocky Past
Avaya has had a bit of a shaky past ever since the financial crisis, unable to post an annual profit since their 2007 buyout during the recession. Originally part of AT&T, Avaya sells phones, telecommunications technology as well as cloud based software solutions. However, it has been difficult to keep up with the competition like Cisco Systems Inc., and even the smaller business-phone startups that keep popping up.
What Will Avaya Look Like Next Year?
But then that brings us to the next question - who will purchase Avaya? Or, at least, the company's contact center solution. At this point could honestly could be anyone's guess, although the Wall Street Journal did offer indication of a possibility that Clayton Dubilier & Rice might snatch it up.
However, how Avaya will look once this is all said and done is, again, anybody’s guess. This is also of course all speculation at this point with only a few unnamed sources providing the details. It is completely possible the company will not finalize a sale, or file for chapter 11 protection at all- but then we might see the slow, drawn out death of Avaya over time.
Also back in May, Avaya had hired Goldman Sachs Group Inc. and Centerview Partners to take a look at what options the company has to strengthen its position – including a potential sale.