BASKING RIDGE, NJ -- Global Communications provider Avaya Inc. has announced plans to cut its work force by more th...
March 11, 2002
BASKING RIDGE, NJ — Global Communications provider Avaya Inc. has announced plans to cut its work force by more than eight per cent and sell a minority stake in the company to private equity firm, Warburg Pincus Equity Partners.
The company says the 1,900 jobs it will cut from its workforce will take place in the second fiscal quarter and should result in annualized savings of about US$180 million to US$200 million.
The company said it expects revenues for its second fiscal quarter ending March 31, to be approximately $1.240 billion to $1.275 billion, compared to the previously stated range of $1.254 billion to $1.358 billion.
The company also said it expects the net loss from ongoing operations for the second fiscal quarter to be a loss of six cents to 10 cents per diluted share, compared with a loss of eight cents, as previously stated.
Additionally, Avaya announced a plan designed to enhance its liquidity and strengthen its balance sheet. The plan includes the following steps:
The sale of 14,383,953 shares of common stock to Warburg Pincus at a price of $6.26 per share, the closing price of Avaya’s common stock on Friday March 8, 2002.
The conversion of approximately $438 million of Avaya preferred stock held by Warburg Pincus into 38,329,365 shares of Avaya common stock and the exercise by Warburg Pincus of warrants to purchase approximately another 286,000 shares of Avaya common stock.
As a result of the stock transactions, Warburg Pincus will own about 53 million shares of Avaya common stock — approximately 15.5 percent of the total outstanding.
Jeffrey Harris, Senior Managing Director of Warburg Pincus LLC, resigned from Avaya’s board prior to the board’s approval of the transaction. Warburg Pincus will retain its right to nominate an unaffiliated director to Avaya’s board.