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Vonage Secures Financing

Holmdel, N.J. – VoIP provider Vonage won a major financial reprieve when it announced yesterday that it had signed a definitive agreement to refinance its convertible debt.

The move comes despite a widespread tightening in the credit markets and will keep the struggling VoIP firm afloat.

According to a statement released by the company, the agreed upon financing consists of a $130.3 million senior secured first lien credit facility, a $72.0 million senior secured second lien credit facility and the sale of $18.0 million of senior secured third lien convertible notes.

The lenders under the first and second lien senior facility and the purchasers of the convertible notes will be Silver Point Finance and other third party lenders and affiliates of Vonage.

Vonage will use the financing, plus its cash on hand, to repurchase up to $253.5 million of its existing convertible notes in a tender offer that Vonage commenced in July of this year.

At the request of the lenders, the VoIP firm must hold a stockholders meeting to obtain approval of, among other things, the potential issuance of shares of common stock upon the conversion of the convertible notes. Vonage said it had already obtained binding agreements from stockholders that, in aggregate, hold sufficient votes for stockholder approval.

A special meeting of stockholders is currently scheduled for November 3, 2008.

“Today’s agreement represents a significant milestone in positioning Vonage for the future,” said John Rego, Chief Financial Officer, in the statement. “This agreement provides the company with the financial stability to focus on increasing profitability…
Vonage shares continued to trade below $1.00.