Vonage Holdings Corp. (NYSE: VG) has signed a non-binding letter of intent with "a third party financing source" to provide $215 million in a private debt financing.
The company noted that about two-thirds of the financing will be provided through a senior secured credit facility and the rest will be an issuance of convertible secured notes. The letter of intent is a proposal "that will be used as a basis for financing," so it is not necessarily a done deal. It sounds like it may even be testing the waters to see how the market reacts, but that is just conjecture.
Net proceeds from this financing, plus its available cash on hand, would be used to repay, tender, or redeem its existing convertible notes. Those notes can be Put back to Vonage on December 16, 2008 with a principal amount due of approximately $253 million.
As of March 31, 2008, the Company had approximately $190 million in cash and cash equivalents, of which $42 million was restricted and $148 million was unrestricted. As a reminder, the company will report its earnings on May 8, 2008.
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Jon C. Ogg
April 25, 2008