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Avaya Improves Liquid Yield Option™ Notes Exchange OfferConsideration And Extends Expiration Deadline To Jan. 27, 2003

01-13-2003

Avaya Inc. (NYSE:AV), a leading global provider of communicationsnetworks and services to businesses, today said the value of themixed consideration of the exchange offer for its Liquid YieldOption™ Notes (LYONs) due 2021 has been increased, and theexpiration of the exchange offer has been extended to 12:00midnight, EST, on Jan. 27, 2003. Warburg Pincus Equity Partners,L.P. and affiliated investment funds are participating in theexchange offer with Avaya.

Avaya Inc. (NYSE:AV), a leading global provider ofcommunications networks and services to businesses, today said thevalue of the mixed consideration of the exchange offer for itsLiquid Yield Option™ Notes (LYONs) due 2021 has been increased, andthe expiration of the exchange offer has been extended to 12:00midnight, EST, on Jan. 27, 2003. Warburg Pincus Equity Partners,L.P. and affiliated investment funds are participating in theexchange offer with Avaya.

As a result of the increase, holders who elect to receive themixed consideration will receive $208.40 in cash and shares ofAvaya common stock having a value of $208.40, subject to a maximumof 105 shares and a minimum of 77 shares, for each $1,000 aggregateprincipal amount at maturity of LYONs tendered and not withdrawnprior to expiration of the exchange offer. The number of shares ofAvaya common stock delivered will be based on the volume-weightedaverage trading price of a share of Avaya common stock on the NewYork Stock Exchange (NYSE) during the five NYSE trading days endingon and including the second NYSE trading day prior to theexpiration date of the exchange offer. Based on the new Jan. 27expiration date, the five NYSE trading days used to determine thevalue of Avaya common stock would be Jan. 16, 17, 21, 22 and23.

Prior to the increase in the value of the mixed consideration,holders who elected to receive the mixed consideration would havereceived $203.87 in cash and shares of Avaya common stock having avalue equal to $203.87, subject to a collar, for each LYONtendered. The amount of cash consideration offered to holders whoelect to receive cash only remains unchanged at $389.61.

LYONs properly tendered and not validly withdrawn prior to theexpiration of the exchange offer will be subject to proration toensure that LYONs tendered by holders electing the mixedconsideration are accepted for exchange first and that no more thanan aggregate of $200 million in cash is paid in the exchange offer.Of this $200 million, Avaya will pay up to $100 million and theWarburg, Pincus Funds will pay up to $100 million. Avaya will issueall of the shares of Avaya common stock in the exchange offer.Avaya and the Warburg Pincus Funds do not expect to offer anyfurther improvements to the economics of the offer. The terms ofAvaya's credit agreements prevent Avaya from increasing the amountof cash it is offering, and NYSE rules preclude Avaya from issuingmore common shares without shareholder approval.

Avaya, together with the investment funds managed by WarburgPincus LLC, commenced the exchange offer on Dec. 23, 2002, for upto $660,542,000 aggregate principal amount at maturity of LYONs.Avaya noted the previous expiration date of Jan. 22, 2003, wasextended in accordance with Securities and Exchange Commission(SEC) requirements. All other terms of the exchange offer remainthe same. As of Jan. 10, no LYONs had been tendered.

Joseph P. Landy, co-president of Warburg Pincus, was elected tothe Avaya board of directors effective as of January 6, 2003.

Morgan Stanley & Co. Incorporated is acting as dealermanager for the exchange offer. Georgeson ShareholderCommunications, Inc. is the information agent, and The Bank of NewYork is the exchange agent. Copies of the offer documents may beobtained at no charge from the information agent at 866-295-4337 or212-440-9800 or from the SEC's Web site at www.sec.gov. Additional informationconcerning the terms of the exchange offer, including all questionsrelating to the mechanics of the offer, may be obtained bycontacting the information agent at 866-295-4337 or Morgan Stanleyat 212-761-5409 (collect).

A registration statement relating to the Avaya common stockbeing offered has been filed with the SEC but has not yet becomeeffective. Such securities may not be sold nor may offers to buy beaccepted prior to the time the registration statement becomeseffective. This news release shall not constitute an offer to sellor the solicitation of an offer to buy nor shall there be any saleof the Avaya common stock in any state in which such an offer,solicitation or sale would be unlawful prior to registration orqualification under the securities laws of any such state.

The offer may only be made pursuant to the offer toexchange/prospectus, dated Dec. 23, 2002, (as amended on Jan. 13,2003), and the accompanying letter of transmittal.

About Avaya
Avaya Inc. designs, builds and manages communications networks formore than one million businesses worldwide, including 90 percent ofthe FORTUNE 500®. Focused on businesses large to small, Avaya is aworld leader in secure and reliable Internet Protocol (IP)telephony systems and communications software applications andservices. Driving the convergence of voice and data communicationswith business applications — and distinguished by comprehensiveworldwide services — Avaya helps customers leverage existing andnew networks to achieve superior business results. For moreinformation, visit the Avaya Web site: http://www.avaya.com.
NOTE: Liquid Yield Option and LYON are trademarks of Merrill Lynch& Co., Inc.

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