Vonage having trouble selling its debt
Vonage Holdings announced Thursday that is extending its offer to purchase its convertible debt for a fourth time - not really good news.
Amid the recent credit crunch, Vonage has had no luck getting rid of the $253 million in 5 percent senior unsecured convertible notes, which mature in 2010. The tender offer is valid until Nov. 3, or until Vonage has to extend it again because no one is impressed with their future prospects at the moment.
In a release dated Oct. 7, 2008, John Rego, Vonage Chief Financial Officer, said, "We continue to work diligently to complete the refinancing of our convertible notes and are encouraged by our progress to date. We believe the updated structure we are announcing today will provide the necessary funding to operate our business for the foreseeable future."
Vonage gained subscribers last quarter and reduced churn a bit, but it doesn't look like the funding Rego mentioned is coming from repurchase of the debt in the foreseeable future. So what other options does Vonage have left, besides hoping they can rapidly erase a $7 million operating loss? Could Vonage be one of the first economic downturn casualties in the VoIP space?