Vonage lines up $215 million in financing
app.com
Money to help pay off company's $253M debt
By David P. Willis • BUSINESS WRITER • April 26, 2008
Holmdel-based Vonage Holdings Corp. has lined up $215 million in financing that the Internet telephone company will use to pay off debt and help avoid bankruptcy, the company said Friday.
The company said it has signed a nonbinding letter of intent with an unnamed "third-party financing source." The letter does not constitute a commitment to provide the money, Vonage said in a news release.
The private debt financing would be used to pay off $253 million in debt that comes due in December. The $38 million balance would be paid from the Internet telephone company's cash, which amounted to about $150 million in cash and cash equivalents as of March 31.
"We are pleased with our progress at this stage of our refinancing efforts, particularly during this extremely challenging time for the credit markets," said John S. Rego, Vonage's chief financial officer.
Vonage, which has 2.6 million customers, said it would provide an update on its refinancing efforts when it reports first-quarter earnings on May 8.
Last year was a tough time for Vonage, which has yet to turn a profit. It settled several patent lawsuits filed by companies including Verizon Communications, Sprint Nextel Corp., and AT&T Inc., agreeing to pay a total of about $240 million and license technology.
Last fall, the company said it might not have enough cash to pay off its debt to bondholders and could face bankruptcy.
In an interview with Bloomberg News Service in January, Chief Executive Officer Jeffrey Citron said negotiating better debt terms was a "top priority."
Vonage shares (VG) rose 11.6 percent Friday to $2.01, up 21 cents. |
