A group of Avaya Holdings Corp. debt holders told the company s loan agent they intend to call a default on the company if it fails to file its quarterly results by the end of a grace period.
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The lenders wrote a letter to Goldman Sachs Group Inc., the loan's agent, on Tuesday, according to people with knowledge of the situation.
Avaya delayed filing quarterly results because of internal investigations related to a whistleblower letter and financial results for the quarter ended June 30. The delay could constitute an earnings covenant if not remedied, according to the people who asked not to be named because the matter is private, according to the group, working with Akin Gump Strauss Hauer Feld. The size of the group couldn't be immediately learned.
Representatives for Goldman and Avaya didn't want to make a statement. A representative for Akin didn't respond immediately to a request for comment.
Avaya s debt and shares fell this week after the company said it had substantial doubts about its ability to continue as a going concern, delayed its financial results and reported a steep revenue drop.
The telecommunications software company has until September 30 to file the quarterly results before it can cause an event of default under the loan, according to an estimate from CreditSights.
Creditors organized after Avaya sold a $350 million leveraged loan and $250 million exchangeable note in late June, and weeks later predicted a decline in its financial performance and ousted its chief executive.
The Akin group, consisting of holders of Avaya's older debt, is concerned about the company and its bankers lack of disclosures when marketing the new deal, and potential moves the company may make to address its convertible notes due to 2023. Goldman and JPMorgan Chase Co. led the deal in June.
The holders of the newly-issued $350 million leveraged loan are working with FTI Consulting Inc. and Glenn Agre Bergman Fuentes to explore their options, as reported by Bloomberg. Avaya hired a firm called AlixPartners LLC, Evercore Inc., and long-time counsel Kirkland Ellis to weigh options for the convertible notes.
Avaya's shares closed at 67 cents on Wednesday after plunging 46% on Tuesday. Its 6.125% bond due to 2028 trades at around 47.75 cents on the dollar, while its convertible notes change hands for around 20 cents. The company's older loans traded at around 49 cents, while the new loan reached a recent low of 65 cents, according to data compiled by Bloomberg.
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