
	Financing Arrangements

In connection with the Merger, on October 26, 2007, the Company entered into financing arrangements consisting of (a) a senior secured credit facility (the "Senior Secured Credit Agreement"), (b) a senior unsecured credit facility, which later became senior unsecured notes, and (c) a senior secured asset-based revolving credit facility (the "Domestic ABL"). The Senior Secured Credit Agreement consists of senior secured term loans and a senior secured multi-currency revolver. The financing arrangements were subsequently amended through a series of refinancing transactions and in connection with the acquisition of NES discussed in Note 1, "Background, Merger and Basis of Presentation". During fiscal 2015, the Company entered into several refinancing transactions which extended the maturity dates of certain existing debt and provided for a new senior secured foreign asset-based revolving credit facility.

On May 29, 2015, Avaya Inc. entered into Amendment No. 9 to the Senior Secured Credit Agreement pursuant to which the Company refinanced a portion of the senior secured term B-3 loans ("term B-3 loans"), senior secured term B-4 loans ("term B-4 loans") and senior secured term B-6 loans ("term B-6 loans") in exchange for and with the proceeds from the issuance of $2,125 million in principal amount of senior secured term B-7 loans ("term B-7 loans") maturing May 29, 2020.

On June 4, 2015, Avaya Inc. entered into Amendment No. 4 to the Domestic ABL which, among other things: (i) extended the stated maturity of the facility from October 26, 2016 to June 4, 2020 (subject to certain conditions specified in the Domestic ABL), (ii) increased the sublimit for letter of credit issuances under the Domestic ABL from $150 million to $200 million, and (iii) amended certain covenants and other provisions of the existing agreement. At the same time, Avaya Inc. and certain foreign subsidiaries of the Company (the "Foreign Borrowers") entered into a new senior secured foreign asset-based revolving credit facility (the "Foreign ABL") which matures June 4, 2020 (subject to certain conditions specified in the Foreign ABL). Available credit under the Domestic ABL remains $335 million subject to availability under the borrowing base. Available credit under the Foreign ABL is $150 million subject to availability under the respective borrowing bases of the Foreign Borrowers.

At June 30, 2016 and September 30, 2015, the Company had aggregate outstanding borrowings of $60 million and $55 million, in addition to $116 million and $119 million of issued and outstanding letters of credit with aggregate remaining revolver availability of $37 million and $83 million, respectively, under the Domestic ABL.

At June 30, 2016 and September 30, 2015, the Company had aggregate outstanding borrowings of $53 million and $20 million, in addition to $24 million and $22 million of issued and outstanding letters of credit with aggregate remaining revolver availability of $15 million and $101 million, respectively, under the Foreign ABL.

On June 5, 2015, the Company permanently reduced the senior secured multi-currency revolver from $200 million to $18 million and all letters of credit under the Senior Secured Credit Agreement were transferred to the Domestic ABL. At June 30, 2016 and September 30, 2015, the Company had aggregate outstanding borrowings of $17 million and $18 million, respectively, under the senior secured multi-currency revolver.

For the nine months ended June 30, 2016, the Company paid $19 million in aggregate quarterly principal payments on the senior secured term loans under the Senior Secured Credit Agreement. In addition, the Company is required to prepay outstanding term loans based on its annual excess cash flow, as defined in the Senior Secured Credit Agreement. No such excess cash payments were required in the current fiscal year, based on the Company's cash flows.

The weighted average contractual interest rate of the Company’s outstanding debt as of June 30, 2016 and September 30, 2015 was 7.3% and 7.3%, respectively. The effective interest rate of each obligation is not materially different than its contractual interest rate.

Principal amounts of long term debt and long term debt net of discounts and issuance costs consisted of the following:



	June 30, 2016					September 30, 2015
In millions	Principal Amount		Net of Discounts and Issuance Costs			Principal Amount		Net of Discounts and Issuance Costs
Variable rate revolving loans under the Senior Secured Credit Agreement due October 26, 2016	$	17	$	17		$	18	$	18
Variable rate revolving loans under the Domestic ABL due June 4, 2020	60		60			55		55
Variable rate revolving loans under the Foreign ABL due June 4, 2020	53		53			20		20
Variable rate term B-3 loans due October 26, 2017	616		612			616		611
Variable rate term B-4 loans due October 26, 2017	1		1			1		1
Variable rate term B-6 loans due March 31, 2018	537		534			537		532
Variable rate term B-7 loans due May 29, 2020	2,094		2,064			2,112		2,077
7% senior secured notes due April 1, 2019	1,009		1,001			1,009		999
9% senior secured notes due April 1, 2019	290		287			290		286
10.50% senior secured notes due March 1, 2021	1,384		1,370			1,384		1,368
Total debt	$	6,061	5,999			$	6,042	5,967
Debt maturing within one year			(24		)			(7		)
Non-current portion of long-term debt			$	5,975				$	5,960

Annual maturities of the principal amounts of the Company's long-term debt for the next five years ending September 30 and thereafter consist of:



In millions
Remainder of fiscal 2016	$	6
2017	42
2018	1,179
2019	1,324
2020	2,125
2021 and thereafter	1,385
Total	$	6,061

The Company has $617 million of variable rate term B-3 loans and term B-4 loans due October 26, 2017. While the Company has been successful accessing the capital markets on terms and in amounts adequate to meet its objectives in the past, there can be no certainty that such funding will be available in needed quantities or on terms favorable to the Company due to market conditions or other occurrences. If the Company is unable to raise the funds required to pay or refinance its term B-3 loans and term B-4 loans prior to the filing due date of its annual Form 10-K for the year ending September 30, 2016, the Company may not be able to assert that it will continue as a going concern in such filing. The Company’s credit facilities, the indentures governing the 2019 senior secured notes and the indenture governing the 2021 senior secured notes contain various covenants that among other matters, requires the Company to deliver timely audited financial statements, which shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit. A breach of this or any other covenant could result in a default under one or all of the Company’s credit facilities and/or the indentures governing the notes. In the event of any default the applicable lenders could elect to terminate borrowing commitments and declare all borrowings outstanding, together with accrued and unpaid interest and any fees and other obligations, to be due and payable.

Capital Lease Obligations

Included in other liabilities is $63 million and $61 million of capital lease obligations, net of imputed interest as of June 30, 2016 and September 30, 2015, respectively, which includes assets under a sale-leaseback arrangement and an office facility.

On August 20, 2014, the Company entered into an agreement to outsource certain delivery services associated with the Avaya Private Cloud Services business. That agreement included the sale of specified assets owned by the Company which are being leased-back by Avaya and accounted for as a capital lease. The agreement also provided additional financing to Avaya and its subsidiaries for the sale of equipment used in the performance of services under the agreement. During the nine months ended June 30, 2016 and 2015, the Company received proceeds of $14 million and $15 million, respectively, in connection with the sale of equipment used in the performance of services under this agreement. As of June 30, 2016 and September 30, 2015, capital lease obligations associated with this agreement were $49 million and $48 million, respectively.