Avaya gets lender approval to amend covenants

By Sara Rosenberg

New York, Aug. 15 - Avaya Inc. received consent from lenders to amend its existing $561 million five-year credit facility in order to change EBITDA and EBITDA-to-interest expense covenants.

The amendment is still subject to final documentation, which is expected to be completed within the next few days.

Under the amendment, the consolidated EBITDA to interest expense ratio will be changed to 1.7 to 1 for the four quarters ending Sept. 30, 2002 and the minimum consolidated EBITDA requirement will be changed to $70 million for the three quarters ending Sept. 30, 2002.

"The support we have received from our lenders through the amended credit facility will help us implement the aggressive actions we're taking to maintain Avaya's financial health as our industry continues to face constrained customer spending," said Garry McGuire, chief financial officer, in a news release. "The new commitments give us, along with our own cash resources, access to a total of approximately $1 billion. We intend to move forward with our objective to return to profitability and enhance liquidity by reducing expenses and improving working capital."

Also released on Thursday was the company's decision not to renew a $264 million 364-day credit facility that expires at the end of August.

Avaya is a Basking Ridge, N.J. provider of communications networks.

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