Avaya sets stock amount for LYONs exchange

New York, Jan. 24 - Avaya Inc. said it will pay $208.40 and 77 shares of its common stock per $1,000 principal amount at maturity to holders of its Liquid Yield Option Notes due 2021 who choose the combination cash and stock option in its current tender offer.

The number of shares is based on the volume-weighted average trading price of the stock for Jan. 16 through Jan. 23, which was $2.7181. The number of shares is the minimum under a collar included in the terms of the exchange.

As previously announced, holders who choose the cash option will receive $389.61 per $1,000 principal amount at maturity of the LYONs.

Other terms of the exchange offer remain unchanged following the improvement to the terms and extension announced by the Basking Ridge, N.J. communications equipment company on Jan .13.

The expiration date is midnight ET on Jan. 27.

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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