Avaya will be soon out of bankruptcy according to its former CEO Kevin Kennedy.
Apparently this is all due to a Plan Support Agreement (PSA) with holders of more than 50 percent of its first lien – or highest priority – debt.
Kennedy said the new plan is the result of “extensive negotiations” among Avaya and members of its “Ad Hoc First Lien Group”.
The creditors have agreed to support Avaya’s amended plan – which includes wiping more than $3 billion from Avaya’s debts, and transferring pension plan obligations under the Avaya Pension Plan for Salaried Employees (APPSE) to the US Pension Benefit Guaranty Corporation (PBGC).
The amended plan also pledges to take steps to enable Avaya to emerge from the Chapter 11 process as a public company. It still needs to be cleared by the Court which is likely to happen on 23 August.
Along with the debt holder agreement, Avaya announced that Kennedy is stepping down from the CEO post to be replaced by chief operating officer Jim Chirico as of 1 October. Kennedy will also retire from the board of directors, but will remain an advisor to the firm.
Avaya’s bankruptcy process hit shedloads of resellers and distributors. Avnet was named the firm’s second biggest unsecured creditor, with Avaya owing the distribution giant $8.8 million in unsecured debt.
Other large creditors include big reseller partners such as World Wide Technology which was owed $1.6 million and SHI
Avaya has also today filed its preliminary third quarter 2017 financial results, which expects revenues to fall nine percent year over year to around $802 million to $804 million, while EBITDA is forecast to come in at $202 million to $206 million down from $223 million reported in Q3 of 2016.
Extreme Networks will continue its buying frenzy even after it completes its Avaya and Brocade deals.
The company is close to snapping up Avaya’s networking business for £77.5 million, after being named the preferred bidder in March, which triggered a stalking horse bidders process.
The acquisition is part of a trio of Extreme deals, with the vendor acquiring Zebra’s wireless LAN arm and expecting to complete a deal for Brocade’s networking business in August.
But the company said that its acquisition spree is far from over and did not rule out further additions this year.
An Extreme spokesperson said that the company was continuing to shore up its portfolio as part of a scaling process where size means everything.
The company is eying companies in the switching space and tangential capabilities to strengthen areas that its partner want to deliver.
Extreme expects Brocade and Avaya will see Extreme double its customer base and partner base.
Extreme’s partner programme is fairly lucrative and the company wants to expand that to onboard the partners because it thinks there is an opportunity to expand its footprint.
Avaya partners should be reassured after an uncertain few months, the company spokesman said.
There is some relief that the technology is going to a networking company and there’s a feeling that the uncertainty is all over.
Avaya is flogging its networking business to Extreme Networks for $100 million.
While Extreme said that it was interested in the deal in March it took a while for the deal to go through because Avaya was asking around to see if it could get more dosh. The deal will close on 1 July.
Avaya is selling off the family silver to help it restructure debts, and wants to focus on unified communications instead.
Extreme wants to take on Cisco and HPE and has also acquired Brocade’s data centre networking so it can cover the data centre core, LAN, campus networks, WANs and security.
Extreme thinks the deal will yield annual revenues which are more than $200 million.
There are a few channel partners who are worried about their relationship with unified comms specialist Avaya which has filed for Chapter 11 protection.
Word on the street is that the outfit owes quite a bit of dosh to its channel partners.
Avaya announced that it had started the Chapter 11 process and would be rebalancing its balance sheet, “to better position itself for the future”.
However there are a few channel names who will be caught up with the case because of the global size of the indirect partner base, which stands at 6,500 as of 30 September last year. More than 74 percent of product revenues in fiscal 2016 came from the channel.
Top if the pile is Avnet which is owed $8.8 million but also hit will be HPE, Salesforce, IBM, Infosys, World Wide Technology and Red Hat.
In a statement the vendor has promised that it will emerge from the current process stronger.
Kevin Kennedy CEO of Avaya insisted the company was performing well, the only problem is that the current capital structure is over 10 years old and was put in place to support its business model as a hardware-focused company.
Things have changed since then and Avaya is saddled with large debt obligations and the upcoming debt maturities. The company needs to be recapitalized, he said.
“Pursuing restructuring through chapter 11 will enable us to reduce Avaya’s debt and interest expense, while providing increased financial flexibility to further invest in innovation and growth to enhance our market-leading competitive position,” he added.
He is also confident he can minimise disruption to our customers, partners, and employees. He did not expect the company to generally experience any material disruptions during the chapter 11 process.
Avaya has started a new midmarket programme for a ‘limited number’ of Avaya Connect channel partners.
The imaginatively titled Avaya Midmarket Select Programme enable partners to offer Select Engagement Packages of services and products specifically aimed at the midmarket.
Avaya has been worried that the midmarket has been tricky – particularly when it comes to Unified Communications. Fully integrated solutions, which rely hardware and software sit at one end of the market while cloud only packages are parked at the other with little for the middle ground.
Avaya says that it already has more than a dozen channel partners already signed up in the US, Canada and Europe, and has now opened the programme to others. Partners must meet requirements for training, expertise, business plans and growth targets.
The company said that the programme will dramatically reduce the total cost of ownership (TCO) for purchasing, deploying and supporting midmarket solutions.
The packages offers a complete stack of enterprise-class solutions such as unified communications, contact centre, video, networking, mobility, and professional services.
Avaya’s roots are in proprietary hardware, but it appears to be successfully using commodity hardware and standards-based software. It recently launched it’s own software-defined networking architecture earlier this year, rivalling solutions from both Cisco and VMware.
Cisco, Polycom and Avaya make hardware to let enterprises to video conference, but the arrival of cloud computing means they’re likely to see flat growth.
That’s the conclusion of Eric Abbruzzese, research analyst at ABI Research, whose video conference hardware doesn’t quite cut the ice.
He said: “With the current market focus on cloud computing and hardware virtualisation, dedicated hardware sales will see little growth in all video delivery markets, including videoconferencing telepresence hardware.”
He said hardware revenues are likely to be more or less flat up to 2020 but the Ciscos of this world will have little luck selling kit if products don’t adopt to a virtualisation model.
He said the three firms in question have already begun to move to cloud based systems and using their existing products as a foundation for the cloud services.
Aside from the enterprise, video conferencing for us plebs will show strong growth. Skype, ooVoo and Google Hangouts will all have their place in the sun.
Avaya is moving to help partners and disties speed up access to its portfolio of unified communications, contact centre, networking, and SME products.
The business communications and collaboration systems and services company has announced that it will be rolling out its Avaya One Source globally.
It’s also announced three new Avaya Aura suites of UC, mobility and collaboration applications that help simplify pricing and the delivery of UC applications.
According to the company, the suites make it easy and cost-effective for channel partners and customers to select and deploy the right mix of UC capabilities across their entire workforce.
Avaya One Source is said to speed quoting and ordering of all Avaya products through more efficient pricing, processes and tools. New automation capabilities, real-time access to standardised pricing, and an integrated and centralised web-based system is also claimed to significantly reduce order cycle times, enabling channel partners to deliver quicker responses to customers.
The service is said to be available to all 9,000 Avaya Connect channel partners and will also include simplified global pricing and discounting reduces 1,400 Avaya material price groups to 13 and combines over 200 separate pricing catalogs into one.
Avaya One Source is already deployed in key regions throughout the world, with full deployment planned for all countries in Europe, Africa, the Middle East and Asia Pacific by July.