PBGC to Pay Pension Benefits for Salaried Employees and Retirees of Avaya, Inc.

December 15, 2017

WASHINGTON — The Pension Benefit Guaranty Corporation will pay retirement benefits for nearly 8,000 current and future retirees who participated in the Avaya, Inc. Pension Plan for Salaried Employees.

Avaya filed for Chapter 11 protection last January and is emerging from bankruptcy. The company asked the bankruptcy court to allow it to end its salaried plan. That motion was granted, and termination of the pension plan went into effect on November 30, 2017, the date proposed by Avaya in notices sent to participants.

The Avaya salaried plan is 63% funded, with plan assets of $1.6 billion and liabilities for future benefits of $2.5 billion, and thus is underfunded by $938 million. Benefit accruals under the plan have been frozen since 2003.

PBGC will pay pension benefits earned by retirees of Avaya’s salaried plan, up to the legal limits.

Retirees will continue to receive benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

A separate plan, the Avaya, Inc. Pension Plan, which covers nearly 7,000 participants, remains ongoing and is sponsored by the reorganized Avaya.

Retirees who will receive a benefit from PBGC may be eligible for the federal Health Coverage Tax Credit (HCTC), an IRS tax credit for health care insurance premiums. Visit PBGC’s HCTC webpage, to view information on the tax credit.

Avaya, incorporated in 2000 when Lucent Technologies spun off its enterprise communications group, provides contact center and unified communications products and services worldwide. Avaya is headquartered in Santa Clara, California.

About PBGC

PBGC protects the pension benefits of nearly 40 million Americans in private-sector pension plans. The agency operates two separate insurance programs — one covering pension plans sponsored by a single employer and another covering multiemployer pension plans, which are sponsored by more than one employer and maintained under collective bargaining agreements. PBGC is currently responsible for the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and, for the single-employer program, assets and recoveries from failed single-employer plans. For more information, visit PBGC.gov.

PBGC Number: 17-11

Avaya Successfully Completes Financial Restructuring and Emerges from Chapter 11

Santa Clara, Calif. - December 15, 2017 - Avaya Holdings Corp. (“Avaya” or the “Company”) announced that it has successfully completed its debt restructuring and emerged from chapter 11.

“This is the beginning of an important new chapter for Avaya,” said Jim Chirico, Avaya’s president and CEO. “In less than a year since the commencement of our chapter 11 restructuring, Avaya has emerged as a publicly traded company with a significantly strengthened balance sheet. Overall, we reduced our prior debt load by approximately $3 billion, and we exit today with more than $300 million in cash on our balance sheet. The reduction of our debt and certain other long-term obligations will also improve annual cash flow by approximately $300 million compared to fiscal 2016.”

“We have the flexibility we need to invest in the large and growing contact center and unified communications markets as we complete our transformation to a software, services and cloud solutions provider,” Chirico added. “With a new Board and leadership team firmly in place, Avaya is now well-positioned to execute on its growth plan and deliver the returns and value expected by our stakeholders.”

Avaya is taking the steps necessary to list on the New York Stock Exchange. The company expects to have approximately 110 million shares outstanding upon emergence.

Centerview Partners LLC and Zolfo Cooper LLC are Avaya’s financial and restructuring advisors and Kirkland & Ellis LLP is the company’s restructuring counsel.


Avaya emerges from Chapter 11 after restructure
By James Pearce; Global Telecoms Business ~ Dec 18, 2017

Avaya to pay PBGC $340 million as part of restructuring agreement
By Hazel Bradford; Pensions & Investments ~ Nov 29, 2017

U.S. judge clears Avaya Inc to exit bankruptcy
By Jim Christie; Reuters ~ Nov 28, 2017

S&P 500’s Biggest Pension Plans Face $382 Billion Funding Gap
By Brandon Kochkodin and Laurie Meisler, Bloomberg - Jul 20, 2017

Extreme Networks Completes Acquisition of the Networking Business from Avaya, Inc.
Avaya Press Release – Jul 17, 2017

Avaya, bankruptcy and the state of the changing communications market
By Justine Brown; CIO Dive ~ May 23, 2017

Avaya sells networking business to Extreme Networks for $100 million
By Natalie Gagliordi ; ZDNet ~ Mar 07, 2017

Avaya's Chapter 11 filing sends waves of disruption
By Guy William Clinch, NetworkWorld - Feb 10, 2017

Legally & Practically: What Avaya's Chapter 11 Means to Customers
By Marth Buyer, No Jitter - Feb 8, 2017

Avaya Partners Relieved by Chapter 11 Filing, Decision Not to Sell Call-Center Business
By Edward Gately; Channel Partners ~ Feb 01, 2017

Avaya granted $425m loan from US court
By James Pearce; Capacity Media ~ Jan 23, 2017

Avaya files for Chapter 11 bankruptcy, won't sell contact center assets
By Larry Dignan, zdnet - Jan 19, 2017

Telecom Company Avaya Files for Bankruptcy
Reuters report in Fortune – Jan 19, 2017

Multibillion-dollar phone firm deal may fall apart
By Josh Kosman, New York Post - Jan 4, 2017

NRLN Avaya Retirees Chapter Working to Protect What We’ve Earned

Another important release from August 25, 2016

The NRLN Avaya Retirees Chapter has been working database

June 16, 2017
The article below is only for information relevant to the NRLN’s agenda but not necessarily a reflection of the NRLN’s position on issues. Vern Larson, President – Avaya Chapter of the NRLN The NRLN is nonpartisan and its positions on retirement issues are presented in its Legislative Agenda and white papers that can be accessed from the Legislative Agenda tab at www.nrln.org.

Trump White House at work on executive order tackling drug prices

By Eric Sagonowsky; FiercePharma ~ Jun 14, 2017

If President Donald Trump can’t count on Congress to pass legislation targeting high drug prices, his administration may have to go it alone. The White House is working on an executive order on the issue, according to BioCentury, with eyes on value-based contracting for executive agencies.

The executive order would also seek trade policies that protect American drugmakers’ intellectual property rights abroad, according to BioCentury’s sources. The White House didn’t immediately respond to a request to confirm the details.

Since winning the U.S. election, President Trump hasn’t been shy about criticizing pharma, saying back in January that the industry has been “getting away with murder” with high drug prices. At the time, he said the government would implement competitive “bidding” to save billions in costs—not a popular proposal in the drug industry.

RELATED: Trump to pharma: You're 'getting away with murder,' and I'm the one to stop it

Some of the president's other ideas are favored by pharma, however, including a potential tax repatriation holiday, a tax overhaul, fewer regulations and trade policies that defend U.S. pharma’s IP rights.

The BioCentury report comes a day after the Senate’s Health, Education, Labor and Pensions committee convened a hearing to discuss drug pricing; two follow-up hearings are planned later this summer.

Also on Tuesday, Sen. Ron Wyden, D-Ore., introduced the SPIKE Act aimed at deterring the large drug price hikes that have made so many headlines over the last two years. Sen. Wyden’s bill would force drugmakers to justify price hikes above a certain threshold. It could require some companies to disclose R&D and marketing costs, another unpopular idea in biopharma.

RELATED: New FDA commissioner Gottlieb unveils price-fighting strategies

The bill targets not only sky-high price hikes like Turing Pharma’s notorious 5,000% increase on Daraprim but also smaller hikes on big-selling drugs that can hit Medicare and Medicaid budgets hard. It would allow drugmakers to roll back their price hikes if they don’t want to release information justifying the underlying costs.

And while the FDA can’t regulate drug prices, President Trump’s new agency chief recently unveiled some of his own tactics aimed at lowering costs.

RELATED: Pharma CEOs, eager for tax breaks and regulatory help, make nice with Trump

Last month, FDA Commissioner Scott Gottlieb said the agency will publish and update a list of medications that are off patent and have no competition; work to improve generic review times; and seek to “curtail gaming” of regulations by the industry that allows companies to extend patent monopolies.

On the first strategy, Gottlieb said such a list could “entice competitors into the market” and ultimately lower costs.

A number of proposals, including Medicare price negotiations and drug importation, are pending in Congress, but none has been taken to a vote this session. Meanwhile, lawmakers in more than 30 states are trying to pass their own bills to rein in pharmaceutical costs.

National Retiree Legislation Network – Avaya Retirees Chapter Contribution Form The NRLN is a nonprofit, tax-exempt organization. Contributions are not tax deductible.


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