VoIP service provider, Vonage, is to raise up to USD215m as part of a debt refinancing deal with hedge fund Silver Point Finance.
Under the deal, Silver Point has committed USD215m in debt financing, with an extra USD60m to USD90m to be provided by other lenders. According to an SEC filing, Vonage’s acting CEO, Jeffrey Citron, is due to provide part of the extra funds. The money is expected to be raised in Q3 2008.
These funds will be used by Vonage, along with existing cash, to repurchase convertible notes. These were issued by Vonage to raise capital without having to sell assets and make up its USD253 debt.
In a separate move, Citron is expected to be replaced by a full-time CEO in the coming days, claims the WSJ. Citron founded Vonage and ran the firm as CEO until 2006. In April 2007 he reassumed his role as CEO following a number of legal disputes.
In Jan the firm agreed an out of court settlement in its patent dispute with Nortel – which alleged Vonage had infringed 12 of its patents. This followed previous patent disputes with Sprint Nextel and Verizon which were settled for USD80m and USD120m respectively.
Vonage provides broadband phone services that allow users to make and receive phone calls from touch-tone phones. The service is sold online and through retailers Best Buy, Circuit City and Wal-Mart in the US and Canada, with Vonage claiming 2.5 million subscribers.