Vonage (VG) disclosed in an SEC filing that it has extended the negotiation period with “a third party financing source” to provide $215 million private debt financing. Vonage first announced negotiation for the financing deal in April. At the time, the company said two-thirds of the deal would be a senior secured credit facility and the rest through convertible senior notes. Vonage plans to use the proceeds along with cash on hand to redeem $253 million in existing convertible notes which can be put back to the company on December 16.
Yesterday, according to the SEC filing, Vonage and the third-party financing source “agreed to extend the exclusivity period under the non-binding letter of intent” to June 23 from June 13 to allow the potential funder “to continue to negotiate the terms of the financing.” Vonage notes that the other party has not agreed to deliver a financing commitment “and there can be no assurance that the financing will be successfully consummated.”
Maybe this is just a procedural hiccup. But keep in mind that with $147 million in cash on the books, the company is not well positioned to pay back $253 million in debt. One way or another, it needs to refinance. Were the deal to fall through, it could be big trouble for the company and its stock.
VG today is down 3 cents, or 1.6%, at $1.80.