Vonage to Re-fi Convertible Debt

Vonage Holdings Corp. announces definitive agreement to refinance convertible debt

October 20, 2008

2 Min Read

HOLMDEL, N.J. -- Vonage Holdings Corp. (NYSE:VG), a leading provider of broadband telephone service, today announced it has signed the definitive agreements to refinance its convertible debt. 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, LLC, certain of its affiliates, other third party lenders and affiliates of Vonage. The Company will use the net proceeds of the financing, plus cash on hand, to repurchase up to $253.5 million of its existing convertible notes in a tender offer that the Company commenced on July 30, 2008.

As a condition to the lenders' obligation to fund, the Company must hold a stockholders meeting to obtain stockholder approval of, among other things, the potential issuance of shares of common stock upon the conversion of the Convertible Notes. The Company has 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, at 8:00 a.m. (not 10:00 a.m., as previously announced), and the Company expects to fund the financing after the special meeting. In addition, the closing of the financing is subject to a limited number of other conditions.

"Today's agreement represents a significant milestone in positioning Vonage for the future," said John Rego, Chief Financial Officer. "This agreement provides the Company with the financial stability to focus on increasing profitability while continuing to provide customers with innovative, feature-rich phone service.

"We are pleased to reach definitive agreement on this refinancing at a time of unprecedented volatility in the credit markets. This agreement provides clarity to our partners and suppliers regarding the Company's liquidity position in these challenging financial times. We are eager to focus on improving the fundamentals of the business to deliver profitable growth."

Vonage Holdings Corp. (NYSE: VG)

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