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Avaya hopes to to cut leverage, has ‘much better’ balance sheet now
By Devika Patel
Knoxville, Tenn., May 22 – Avaya Holdings Corp. has a “much better” balance sheet since it emerged from bankruptcy and now has a capital structure that gives it “room to breathe,” an executive said.
The company has $450 million of liquidity and leverage of 3.2x.
“It’s an okay leverage,” senior vice president and chief financial officer Pat O’Malley said at the Barclays High Yield Bond & Syndicated Loan Conference in Colorado Springs, Colo., on Tuesday.
“I’d like to, over time, take that leverage down.
“If you look at our net leverage, I think the optimal size for this business of net leverage is 2.5x.
“[The] two ways [to get there are] increase the EBITDA and reduce the debt.
“We’ll probably use both of those tools to help drive our net leverage to this level,” O’Malley said.
The company revised its capital structure and now has “life and room to breathe.”
“This has been a great story over the last several years other than the capital structure,” O’Malley said.
“The capital structure was out of line with where the company was sized and eventually they had to deal with.
“The team, they worked out a pretty amicable solution on how we could retool that capital structure that allowed us to reduce our debt and our pension obligations by close to $4 billion.
“That certainly gave us life and room to breathe,” O’Malley said.
The company’s emergence from bankruptcy has given it a “much better” balance sheet.
“We’ve come out of the reorganization with a much better balance sheet,” O’Malley said.
“I’d love to get it stronger, and that’s my job, to get it stronger, but it’s much superior to what it was,” O’Malley said.
Avaya is a Santa Clara, Calif.-based provider of business collaboration and communications services.
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