Item 1.01. |
Entry into a Material Definitive Agreement.
|
As previously disclosed on February 14, 2023, Avaya Holdings
Corp. (the “Company”) and certain of its
direct and indirect subsidiaries (together with the Company, the
“Debtors”) commenced
voluntary cases (the “Chapter 11 Cases”) under chapter
11 of title 11 of the United States Code in the United States
Bankruptcy Court for the Southern District of Texas (the
“Bankruptcy Court”).
The Chapter 11 Cases are being jointly administered under the
caption In re Avaya Inc., et
al.
On February 15, 2023, following interim approval by the
Bankruptcy Court (the “Interim Order”), the Debtors
entered into a priming superpriority senior secured debtor in
possession facility in the form of term loans in an aggregate
principal amount of $500 million (the “DIP Term Loans,” and such
facility, the “DIP Term
Loan Facility,”), pursuant to a superpriority senior secured
debtor-in-possession term loan
credit agreement (the “DIP
Credit Agreement”), by and among Avaya Inc., as borrower
(the “Borrower”),
the Company, the guarantors party thereto (the “Guarantors”), the lending
institutions from time to time party thereto and Wilmington Savings
Fund Society, FSB, as administrative agent and collateral agent.
Pursuant to the Interim Order, the Debtors are permitted an initial
draw in the principal amount of up to $400 million (which such
amount was drawn following entry of the Interim Order), with the
remaining undrawn portion of the DIP Term Loan Facility to be made
available to the Debtors upon the Bankruptcy Court’s order
approving the DIP Term Loan Facility on a final basis (the
“Final Order”).
Capitalized terms used but not otherwise defined in this Item 1.01
of this Current Report on Form 8-K have the meanings given to them in
the DIP Credit Agreement attached as an exhibit to this report.
The proceeds of the DIP Term Loan Facility will be used by the
Debtors to (i) pay certain costs, fees and expenses related to
the Chapter 11 Cases, (ii) make payments in respect of certain
“adequate protection” obligations, (iii) fund working capital
needs, expenditures and general corporate purposes of the Debtors,
in all cases subject to the terms of the DIP Credit Agreement and
applicable orders of the Bankruptcy Court, (iv) repay in full
and terminate the ABL Credit Agreement, dated as of
December 15, 2017 (as amended by Amendment No. 1, dated
as of September 25, 2020), among the Company, the Borrower,
Avaya Canada Corp., Avaya UK, Avaya International Sales Limited,
Avaya Deutschland GmbH, Avaya GmbH & Co. KG, Citibank,
N.A. as collateral agent and administrative agent, the lending
institutions from time to time party thereto and the lending
institutions named therein as letters of credit issuers and swing
line lenders, (v) fund an intercompany loan in an amount not
to exceed $50 million by Sierra Communication International
LLC to Avaya International Sales Limited to be used for working
capital and general corporate purposes of foreign Subsidiaries of
the Debtors, (vi) provide cash collateral to secure the
Debtors’ prepetition letters of credit, and (vii) fund a
deposit of up to $40 million to a segregated account held by
the Debtors for purposes of backstopping the liquidity of certain
foreign non-Debtor
affiliates to the extent necessary to preserve the value of the
Debtors’ international business, subject to the Foreign Reserve
Protocol.
The DIP Credit Agreement includes conditions precedent,
representations and warranties, affirmative and negative covenants,
and events of default customary for financings of this type and
size. The Borrower’s obligations under the DIP Credit Agreement are
guaranteed by the other Debtors and are secured by a security
interest in, and lien on, substantially all property (subject to
certain exceptions) of the Debtors. The DIP Credit Agreement also
contains customary covenants that limit the ability of the Debtors
to, among other things, (1) incur additional indebtedness and
permit liens to exist on their assets, (2) pay dividends or
make certain other restricted payments, (3) sell assets and
(4) make certain investments. These covenants are subject to
exceptions and qualifications as set forth in the DIP Credit
Agreement.
The maturity date of the DIP Term Loan Facility is the earliest to
occur of: (a) April 1, 2023 (if the Final Order has not
been entered by the Bankruptcy Court by such date, unless otherwise
extended); (b) August 15, 2023; (c) the substantial
consummation of a plan of reorganization filed in the Chapter 11
Cases that is confirmed by an order of the Bankruptcy Court;
(d) the acceleration of the loans contemplated under the DIP
Term Loan Facility and the termination of the each lender’s term
commitments thereunder; (e) the consummation of a sale of all
or substantially all of the assets of the Borrower (or the Borrower
and the Guarantors), pursuant to section 363 of the Bankruptcy
Code; and (f) the termination of that certain Restructuring
Support Agreement dated as of February 14, 2023, described in
the Current Report on Form 8-K filed by the Company on
February 14, 2023.
The DIP Term Loans bear interest at a rate equal to SOFR plus
8.00%.
Upon satisfaction of certain conditions, including the
effectiveness of the Joint Prepackaged Plan of Reorganization of
Avaya Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the
Bankruptcy Code, the DIP Term Loans will convert on a dollar-for-dollar basis into
term loans under a senior secured exit term loan facility.
The foregoing description of the DIP Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the DIP Credit Agreement, which is
attached hereto as Exhibit 10.1 and incorporated by reference
herein.