Avaya buys 95.4% of 11 1/8% notes in tender offer

New York, Dec. 1 - Avaya Inc. said it received tenders of $271.19 million or 95.4% of its 11 1/8% senior secured notes due 2009 in its previously announced offer to buy the notes.

As a result, there are $13.205 million of the notes remaining outstanding.

The offer expired at 5 p.m. ET on Dec. 1.

At the previous announcement on Nov. 16, Avaya said it had fixed the purchase price for the notes.

The total consideration of $1,158.95 per $1,000 principal amount, which includes a consent payment for notes tendered by the early consent deadline, was set at 2 p.m. ET on Nov. 15 using a previously announced formula.

The company also said that it had received the required consents from the noteholders to proposed indenture amendments. As of the early consent deadline, which expired as scheduled at 5 p.m. ET on Nov. 15, holders had tendered $271.09 million of the notes, or 95.3%, sufficient to amend the indenture.

As previously announced, Avaya, a Basking Ridge, N.J.-based provider of business communications software, systems and services, said on Nov. 1 that it had begun a cash tender offer for any and all of its $284.395 million of outstanding 11 1/8% notes and had begun soliciting noteholder consents to proposed indenture changes aimed at eliminating substantially all restrictive covenants, the reporting requirements and certain events of default, as well as eliminating the requirement under the indenture to provide security for the notes and related provisions regarding the collateral.

It set an early consent deadline of 5 p.m. ET on Nov. 15 and said that it would set the price it will pay to purchase the notes at 2 p.m. ET on Nov. 15, with an initial settlement on Nov. 16 for all notes tendered by the early consent deadline. Holders tendering notes by that deadline and thus delivering consents to the proposed changes will be eligible to receive a consent payment of $30 per $1,000 principal amount as part of their total consideration. The company set an expiration deadline of 5 p.m. ET on Dec. 1.

Avaya said the purchase price will be set using a formula based on a 50 basis point fixed spread over the designated reference security, the 1½% U.S. Treasury note due March 31, 2006. It will be equal to the present value on the initial settlement date of $1,055.63 (the amount payable on April 1, 2006, the first call date of the notes) and the present value of the interest from the last interest payment date until April 1, 2006, discounted at a rate equal to the sum of (i) the yield on the reference security, and (ii) the fixed spread, minus accrued and unpaid interest from the last interest payment date up to but not including the initial settlement date, minus (2) the consent payment. Holders tendering their notes after the early consent deadline will not receive the consent payment.

All tendering holders will receive accrued and unpaid interest up to but not including the applicable settlement date.

Avaya said that the offer is subject to several conditions, including the receipt of consents from holders of at least a majority of the outstanding notes, the execution of a supplemental indenture incorporating the proposed changes and other customary conditions.

Citigroup is dealer manager and solicitation agent (800 558-3745 or 212 723-6106). Commerzbank Securities and Mitsubishi Securities are co-dealer managers. Georgeson Shareholder Communications is the information agent (800 457-5303).

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