UPDATE 1-Vonage finalizes key debt refinancing deal
NEW YORK, Oct 20 (Reuters) - Internet-based calling company Vonage Holdings Corp (VG.N) announced a definitive agreement for a $220.3 million financing, finalizing a deal seen as crucial to its survival.
Silver Point Finance LLC will lead the deal, which consists of $130.3 million in senior secured first-lien credit, $72.0 million in senior secured second-lien credit and the sale of $18.0 million of convertible secured third-lien notes, Vonage said on Monday.
Proceeds will be used to help refinance $253 million of debt.
"We are pleased to reach definitive agreement on this refinancing at a time of unprecedented volatility in the credit markets," said John Rego, Vonage's chief financial officer.
"This agreement provides clarity to our partners and suppliers regarding the Company's liquidity position in these challenging financial times," he said.
Analysts have said the recent financial crisis and credit crunch made Vonage's refinancing efforts particularly difficult.
Vonage revised the terms of the financing earlier this month after delays in securing a final commitment. It had originally forecast a formal commitment in the second quarter.
Vonage was a pioneer in selling Web-based phone services to consumers looking for cheaper alternatives to traditional landline services.
But it has posted losses since its inception, mainly due to high marketing costs. It also faces growing competition from cable service providers as well as companies offering similar services like Skype, a unit of online auction company eBay Inc (EBAY.O).
The shares have tumbled since their market debut at $17 in May 2006. They have not traded on the New York Stock Exchange in recent sessions, after falling below $1.
The company must still obtain stockholder approval for the deal at a special meeting on Nov. 3, although it said it has already obtained sufficient, binding agreements. (Reporting by Ritsuko Ando, editing by Maureen Bavdek)
