Avaya improves, extends LYONs exchange offer

New York, Jan. 13 - Avaya Inc. improved its exchange offer for its Liquid Yield Option Notes due 2021 and extended the expiration date after no securities were tendered on the original terms.

The Basking Ridge, N.J. communications equipment company is now offering $208.40 in stock and $208.40 in cash per LYONs for holders who choose the combination stock and cash option. That is increased from $203.87 of stock and $203.87 of cash previously.

The cash-only option remains at $389.61 per LYONs.

Avaya said that as of Jan. 10 no LYONs had been tendered.

In addition to sweetening the offer, the company also pushed back the expiration date to midnight ET on Jan. 27 from midnight ET on Jan. 22.

The number of shares offered in the cash and stock option will continue to be based on the volume-weighted average trading price for the five trading days ending on the second trading day before expiration. The number will be subject to a collar, with a maximum of 105 and a minimum of 77 shares, increased from 102 and 76 previously.

Warburg Pincus Equity Partners LP continues to participate in the offer. Avaya and Warburg Pincus said they do not anticipate any further improvement in the terms of the offer.

As previously announced, funding for the cash portion of the offer will be split between Avaya and Warburg Pincus Equity Partners, LP, which owns 14.5% of Avaya's stock. Avaya will provide up to $100 million and Warburg Pincus will provide up to $100 million of the maximum $200 million in cash that will be paid. Avaya noted its credit agreement prevents it increasing the amount of cash and New York Stock Exchange rule prevent it issuing more stock with shareholder approval.

Warburg Pincus has agreed to exchange all LYONs it purchases into common stock, Avaya said, adding that for its financing commitment and participation in the exchange offer Warburg Pincus will receive warrants to purchase additional shares of common stock.

Tenders will be pro rated so that no more than $200 million in cash is paid. Avaya will first accept tenders for the combination of cash and stock followed by those for cash only.

Morgan Stanley & Co. Inc. (call collect 212 761-5409) is dealer manager for the offer. Georgeson Shareholder Communications, Inc. (866 296-4337 or 212 440 9800) is information agent and The Bank of New York is exchange agent.

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