January 26, 2017
The signs have been there for months, but doomsday has finally arrived for Avaya. On Thursday, January 19th, Avaya filed for Chapter 11 bankruptcy. Worse yet, this does not even absolve the company’s debt. After the bankruptcy, Avaya will still have a total debt of about $6.3 Billion, and they are in talks to sell parts of their business to try and get their head above water.
This move has serious implications for contact/call centers still running the Avaya platform.
Avaya Contact/Call Center Solutions
First and foremost, it is important to note that Avaya has stated that they do not at this time intend to sell their contact/call center business. However, this claim may ring hollow, because they tried to do exactly that last year. Avaya attempted to sell their contact/call center business in 2016, but they failed to finalize deals with a few interested buyers. The approximate asking price would have been around $4 Billion.
Avaya has taken out a loan for over $700 Million to help cover operational costs while the business undergoes its reconstruction.
What Happened?
In 2007, Avaya was bought out by private-equity groups, Silver Lake Partners LP and TPG Capital LP, for $8 Billion, and the interest has simply proven too much to bear. The company has been consistently paying $400 Million in interest payments every year, and this recurring cost combined with struggling sales has pushed the company into the red. In the 2016 fiscal year alone, Avaya has posted a net loss of $750 Million, but that is not even the end of it. In September the company noted that it owed its pensioners $1.7 Billion.
This has been a long time coming. In addition to the buyout, Avaya also made a huge acquisition when they purchased Nortel in 2009 for $900 Million. The company just could not climb out of the debt they incurred from these expenditures.
Mindsight Is Ready to Help
Mindsight maintains a full contact/call center consultancy practice, and our principal consultants are ready to help companies as they transition away from Avaya. Through our Contact Center Roadmap, our consultants will analyze your environment and develop a roadmap to fully implement a new contact/call center platform.
It’s possible that Avaya could restructure their business and pull their way out of debt, but signs certainly are not looking good. A previous desire to sell the contact/call center businesses should give all Avaya contact/call center customers pause.
Contact Mindsight today to discuss a Contact Center Roadmap.
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