Jessica DiNapoli, Tom Hals Reuters
WILMINGTON, Del (Reuters) – Telecommunications company Avaya Inc filed for Chapter 11 bankruptcy on Thursday to reduce its debt load of about $6.3 billion but said it would not sell its call center business, which it had tried to do last year.
The bankruptcy underscores the challenges telecommunications companies face as they transition to software and services from hardware. Early last year, Avaya had planned to sell its call center business but did not reach a deal with buyout firm Clayton, Dubilier & Rice LLC, which had been in the lead to acquire it for about $4 billion.
Avaya said it must focus on its debt and that a sale of the call center would not maximize value for its customers or creditors. It is still negotiating deals to sell parts of its business.
The company is hashing out terms of a restructuring deal with creditors. The original goal was to have one in place before bankruptcy, but an agreement was not reached.
The company said an affiliate of Citigroup Inc would provide a $725 million loan for up to a year to fund its operations during the reorganization.