Vonage gets five-year $500 million revolver, $100 million term loan

By Wendy Van Sickle

Columbus, Ohio, Aug. 2 – Vonage Holdings Corp. entered into a credit agreement on Tuesday providing for a $100 million senior secured term loan and a $500 million revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Loans under the credit facility mature on July 31, 2023.

Vonage may obtain incremental term loans and/or revolving loans up to $150 million.

Borrowings will bear interest at Libor plus a margin ranging from 200 basis points to 275 bps, depending on consolidated leverage ratio. The initial margin is 225 bps.

The revolver has an initial commitment fee of 30 bps and can range from 25 bps to 40 bps, also depending on the company’s consolidated leverage ratio.

The term loan is repayable in quarterly installments of $2.5 million.

At closing, the company used $228,922,400 of the net available proceeds of credit facility to retire all of the debt under its credit agreement dated as of July 27, 2015.

The new credit facility provides greater flexibility to the company in funding acquisitions and restricted payments than the previous credit agreement, according to the filing.

The new credit agreement requires Vonage to maintain, prior to issuance of certain permitted qualifying debt, a maximum consolidated leverage ratio of 3 times, with two optional step-ups to 3.5 times following an acquisition, subject to conditions.

After the issuance of qualifying debt, the company will be required to maintain a maximum consolidated leverage ratio of 4.5 times and a maximum senior consolidated leverage ratio of 2.75 times.

There is also a minimum consolidated interest charge ratio of 3 times.

JPMorgan Chase Bank, NA, Citizens Bank, NA and Bank of America Merrill Lynch acted as joint lead bookrunners and joint lead arrangers along with SunTrust Bank, Silicon Valley Bank, Santander Bank, NA, MUFG Union Bank, NA and Fifth Third Bank acted as joint lead arrangers.

JPMorgan Chase is the administrative agent. Citizens Bank and Bank of America, NA are the syndication agents, and SunTrust Bank, Silicon Valley Bank, Santander Bank, NA, MUFG Union Bank and Fifth Third are the documentation agents.

Based in Holmdel, N.J., Vonage provides communication services through broadband devices.

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