Rumours are circulating after Reuters reported last week that buyout firms Silver Lake Partners and TPG Capital are considering a sale of Avaya that could value it at between $6 billion and $10 billion. The move is apparently due to Avaya’s ballooning debt which has spiralled to $6 billion as it has tried to transition from hardware to software and services.
Avaya has hired investment bank Goldman Sachs to explore the possibility of selling itself or some of its major businesses it emerged last week. Avaya President and CEO Kevin Kennedy did confirm that Goldman Sachs is “helping Avaya evaluate expressions of interest that have been received relative to specific assets, as well as explore other potential strategic opportunities.”
Avaya has been generating strong cash flow, with adjusted EBITDA last year reaching $900 million. However, its interest expense of more than $400 million every year has been pushing it consistently into loss.
Avaya also faces a $600 million debt maturity that is due in October 2017, currently it will need to raise cash to settle the debt if a sale can’t be agreed.
The finger pointing has already begun in the wider market where some believe the company has fallen victim to mis-management and poor decisions.
In 2015 the company reported it had over 300,000 customers, including 83% of the Fortune 500 companies.