Mitel is set to exit Chapter 11 Bankruptcy, with the Texas courts approving its pre-packaged plan.
Upon its initiation, the plan will wipe approximately $1.15BN from its debts, which total $1.3BN.
The plan will also reduce its annual cash interest expenses by around $135MN.
Additionally, Mitel will access $64.5MN of financing to support its go-forward operations.
The news comes just 39 days after Mitel filed for bankruptcy, expecting a “swift” exit.
Now, the vendor has pledged to leave Chapter 11 protection within the “current calendar quarter” – aka before July begins.
Then, it may leverage that $64.5MN and look toward its next chapter.
In the meantime, Mitel promises a “normal course of business”.
As such, customers and partners shouldn’t expect the exit process to impact Mitel’s support and services.
“Approval of our plan is a major milestone as we near the conclusion of our financial restructuring,” added Tarun Loomba, CEO of Mitel.
“Over the past several months, we have worked diligently to strengthen Mitel’s financial foundation, and we are proud to have done so with the strong support of our employees, partners, customers, and lenders.
With a more efficient capital structure in place, we’re well-positioned to accelerate growth and sharpen our focus on delivering flexible, secure, and mission-critical communications solutions.
That new structure is critical, as high debts have hamstrung Mitel for the best part of a decade.
Indeed, Mitel incurred significant debt when transitioning from a public to a private company in 2018.
In 2023, Mitel added to this debt load further with the pickup of Unify.
That move continued the company’s longstanding aim to be all things to all people, the Swiss Army Knife of enterprise communications.
However, as one analyst recently told CX Today, that strategy ultimately resulted in Mitel paying $130MN per quarter in interest rates alone.
That proved unsustainable, and Mitel recognized the need to create a new capital structure and underpin that with a new strategy.
Over the past year, that strategy has come to the fore: to lead the hybrid communications market.
In closing up his statements, Loomba reiterated this goal, stating:
We look forward to completing this process in the near term and to emerging as an even stronger vendor, employer, and business partner — continuing our leadership in hybrid communications for years to come.
With its hybrid communications strategy, Mitel supports organizations not ready to lift and shift to the cloud. Instead, they can take a more cautious approach.
That approach allows them to keep key workloads on-premise but layer over cloud solutions to innovate while following the path of least resistance.
As such, Mitel can serve enterprises that need to keep data loads on-premises for compliance and risk control purposes, alongside those that would prefer to devote IT resources to other initiatives.
Mitel announced big partnerships with Genesys and Zoom to support this strategy just weeks before it filed for Chapter 11 bankruptcy.
Already, the latter has resulted in a 21,000-seat megadeal with an existing Mitel customer.
By teaming up with such big brands and securing these deals, Mitel may maintain much of its global install base and remain an enterprise communications stalwart.
Naturally, the market is crowded, and association with the word “bankruptcy” may trouble many businesses.
Nevertheless, with its hybrid strategy, Loomba & Co. appear confident that Mitel will “accelerate growth” in 2025 and beyond.
