Vonage plans up to $125 million credit facility

By Sara Rosenberg

New York, July 24 - Vonage Holdings Corp. is planning on getting an up to $125 million five-year senior secured first-lien credit facility, according to an 8-K filed with the Securities and Exchange Commission Thursday.

Silver Point Finance LLC is leading the deal.

Under the commitment, the company would get a $95 million initial first-lien credit facility and then Silver Point would use commercially reasonable efforts to assemble a syndicate of other lenders to provide up to $30 million of incremental first-lien debt.

Silver Point has committed to be allocated $70 million of the initial credit facility - although it may syndicate a portion of this commitment - and it is a condition to closing that the company obtain commitments from a permitted group for the remaining amount of the initial facility.

Pricing on the credit facility will be Libor plus 1,000 basis points with a 4% Libor floor.

The debt will be sold at an original issue discount of 981/2.

Voluntary and mandatory prepayments of the credit facility from debt and equity issuances during the first three years will be subject to a make-whole, and thereafter a premium of 105 in year four and 103 in year five. The deal is callable at par three months prior to maturity.

Any mandatory prepayments from asset sales/casualty condemnation and extraordinary receipts will be subject to a premium of 108 in year one, 107 in year two, 106 in year three, 105 in year four and 103 in year five.

Any mandatory prepayments from excess cash flow will not be subject to any premium or make-whole.

Financial covenants include a total leverage ratio, a senior leverage ratio, minimum EBITDA, a fixed charge coverage ratio, capital expenditure limitations and minimum liquidity.

Proceeds from the credit facility, along with cash on hand and $90 million of seven-year convertible secured second-lien notes, will be used to fund the repurchase of about $253 million of existing convertible notes in a tender offer, which the company is required to begin promptly.

The convertible notes will be priced at 10% PIK plus 4% cash through the first 12 quarterly interest periods, and thereafter they will be priced at 14% cash.

Silver Point has committed to provide $55 million of the convertible notes and, as a requirement of closing, commitments for the remaining amount must be obtained.

Closing on the initial first-lien credit facility and the convertible notes is expected to occur in the third quarter.

Vonage is a Holmdel, N.J.-based provider of broadband telephone services.

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