Avaya Creditors Seek Appeal After Loan Value Plunge:…

Avaya Creditors Seek Appeal After Loan Value Plunge:…

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  • investors of Avaya Holdings Corp AVYA A $350 million incremental senior leveraged loan shut down a law firm after the loan fell $0.30 against the dollar over the past week. Bloomberg reports.
  • Avaya marketed the deal with help from Goldman Sachs Group Inc and JPMorgan Chase & Co.
  • Akin Gump Strauss Hauer & Feld investigated legal options for insufficient disclosures during the debt securities marketing process.
  • The loan collapsed after the company cut and appointed quarterly sales and earnings expectations a new manager.
  • Avaya had to refinance convertible bonds due in 2023 that were deep out of the money.
  • Avaya brought the deal into a market weakened by recession fears, inflation and rising interest rates after it cut its full-year earnings forecast.
  • Investors pulled out on a proposed $500 million leveraged loan, forcing the company to split the proposed issue into a smaller loan and $250 million in privately placed exchangeable notes, both of which were senior collateral.
  • Avaya also agreed to increase the loan interest rate to 10% above the secured overnight financing rate and to charge an upfront fee.
  • Barely a month later, on July 28, Avaya has reduced its forecast adjusted earnings for the third quarter by more than 60% and cut revenue expectations by over 16%.
  • Avaya’s stock price closed at around $0.82 on Aug. 1, a potential threat to the company, which must maintain a stock price of $1 over a 30-day trading period to stay listed on the NYSE.
  • The credit examiner lowered its rating for Avaya two notches to CCC, citing potential difficulties in maintaining eligibility requirements or attempting to restructure its debt.
  • Price promotion: AVYA shares closed up 0.6% at $0.82 on Tuesday.



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