Avaya to Cut 1,900 Jobs, Sell Big Equity Chunk to Warburg Pincus

Avaya(AV Quote) said it has lowered its second-quarter guidance, cut 1,900 jobs, and agreed to sell 14.4 million common shares to Warburg Pincus.

For the second quarter, the communications equipment maker now sees revenue of about $1.240 billion to $1.275 billion, down from the previous forecast of $1.254 billion to $1.358 billion. The company now expects to lose between 6 cents and 10 cents a share, compared with the previous estimate of 8 cents. On average, analysts are expecting a loss of 7 cents a share for the quarter, according to Thomson Financial/First Call.

Including restructuring charges of $100 million and a one-time charge of $130 million, the company now expects to lose between 68 cents and 72 cents a share, under generally accepted accounting principles.

In total, the company expects the restructuring, which includes the elimination of 1,900 jobs, to save $180 million to $200 million annually.

The company also announced plans to sell 14.4 million common shares to Warburg Pincus at $6.26 a share, the stock's Friday closing price, bringing the firm's total to about 53 million shares, or 15.5% of the total outstanding shares.

Warburg Pincus will convert $438 million of preferred Avaya stock into 38.8 million common shares and exercise warrants to purchase another 286,000 common shares in the future.