Vonage Holdings Corp. (NYSE: VG) has signed a definitive agreements to refinance its convertible debt, a move which will help to secure its future.  The financing package consists of a $130.3 million senior secured first lien credit facility, a $72.0 million senior secured second lien credit facility, and the sale of $18.0 million of senior secured third lien convertible notes.

The lenders under the first and second lien senior facility and thepurchasers of the convertible notes are listed as Silver Point Finance,LLC and certain affiliates, as well as other third party lenders andaffiliates of Vonage.

Vonage will use the net proceeds of the financing along with its owncash on hand to repurchase up to $253.5 million of the company’sexisting convertible notes in a tender offer commenced on July 30,2008.   

Vonage will have to hold a special shareholder meeting with a vote toapprove this measure along with the potential issuance of shares ofcommon stock upon the conversion of the convertible notes.  The companynoted that it has already obtained binding agreements from stockholdersin aggregate to obtain approval, but a special meeting of stockholdersis set for November 3.

This is the lifeblood that shareholders were hoping would come tofruition.  Shares are responding as well this morning.  Friday’s closewas $0.82 and the first indications are up almost 30% on very thinvolume.  Where this ultimately trades today may depend more on theattention given to other low-priced active stocks.  Its 52-week tradingrange is $0.57 to $2.70.

Jon C. Ogg
October 20, 2008

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