S&P says Avaya unchanged

Standard & Poor's said Avaya Inc.'s ratings are unchanged including its corporate credit at B+ with a stable outlook after the company announced that it it sold 34.5 million shares of common stock, raising gross proceeds of $352 million. The company said that it would use $105 million of the proceeds to make a voluntary contribution to its underfunded pension plan.

S&P said Avaya has made significant progress over the past year in improving balance sheet liquidity, increasing cash to $843 million as of June 30, 2003, from $406 million a year earlier.

Total liabilities, however, remain substantial at more than $2 billion, including funded balance sheet debt, unfunded pension and retirement benefits and other capitalized liabilities.

Operating performance has shown some evidence of stabilization, with revenues flat over the past three quarters and EBITDA improved because of cost restructuring during the period, S&P noted. Given recent operating trends and enhanced liquidity, the outlook could be reviewed for a revision to positive within several quarters if Avaya restores some revenue growth and makes further improvements in margins and leverage.

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