Vonage 2008 Annual Report Download - page 48

Financin
g
Activities
C
ash used in financing activities for 2008 of
$
65,470 was
p
rimarily attributable to the repurchase of our previous con-
v
ertible notes of $253,460 in a tender offer in November 2008.
W
e also had a new debt financing for
$
220,300 plus PIK interest
of
$
2,900 offset by original issue discount of
$
7,167, deb
t
r
elated costs of $26,799 and the principal pa
y
ments on capital
l
ease obligations of
$
1,036
.
C
ash provided by financin
g
activities for 2007 of $245 was
p
rimaril
y
attributable to
$
1,265 for net proceeds from exercise of
s
tock options, subscription receivable and from payment
s
r
eceived
f
or the directed share pro
g
ram, which was o
ff
set by th
e
p
rincipal payments on capital lease obligations of
$
1,020.
C
ash provided by financin
g
activities for 2006 of $477,429
was primarily attributable to net proceeds
f
rom our initial public
offerin
g
in May 2006 of $493,040, net of costs, offset by th
e
p
urchase of treasur
y
stock of $11,723 related to customers that
committed to purchase our common stock through our Directed
Share Pro
g
ram and subsequently defaulted on payment, $5,42
6
of net pa
y
ments to Underwriters related to our Directed Shar
e
Program indemnification, offset by
$
1,764 proceeds from ou
r
convertible notes, net of issuance costs, in January 2006
.
CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
The table below summarizes our contractual obli
g
ations at December 31, 2008, and the effect such obli
g
ations are expected to
h
ave on our liquidit
y
and cash
f
low in
f
uture periods.
Payments Due by Period
(
dollars in thousands
)
T
o
t
al
Less
t
han
1
y
ear
2
-3
years
4
-
5
years
After
5
y
ear
s
(
unaudited
)
Contractual Obligations
:
First lien senior facilit
y$
129,974
$
1,303
$
5,538
$
123,133
$
–
S
econd lien senior facilit
y
72,000 – – 1,800 70,20
0
Thi
r
dli
en convert
ibl
e notes 18
,
000 – – – 18
,
00
0
Interest related to first lien senior facilit
y
96,575 21,024 41,457 34,094 –
Interest related to second lien senior facilit
y
165,612 – 4,449 40,228 120,93
5
I
nterest on t
hi
r
dli
en convert
ibl
e notes 42
,
093 – 1
,
112 10
,
057 30
,
924
C
apital lease obligations 37,042 3,960 8,156 8,484 16,442
O
perating lease obligations 4,394 3,774 620 – –
P
urc
h
ase o
bli
gat
i
ons 125,601 92,403 29,498 3,700 –
O
ther obligations
28,600
7
,800 1
5
,600
5
,200
–
Total contractual obligations
$
719,891
$
130,264
$
106,430
$
226,696
$
256,50
1
O
ther
C
ommercial
C
ommitments:
S
tandby letters of credit $ 17,562 $ 17,465 $ 97 $ – $ –
Total contractual obli
g
ations and other commercial commitments $737,453 $147,729 $106,527 $226,696 $256,50
1
S
enior debt facilities.
O
n October 19, 2008, we entered into
definitive agreements for the Financing consisting of (i) the
$
130,300 First Lien Senior Facility, (ii) the $72,000 Second Lien
Senior Facilit
y
and (iii) the sale of $18,000 of Convertible Notes.
The
f
unding
f
or this transaction took place on November 3,
2008.
S
ee Note 11 in the notes to the consolidated financia
l
s
t
a
t
e
m
e
nt
s
.
I
nterest related to second lien senior facilit
y.
A
m
ou
nt
su
n
de
r
t
he Second Lien Senior Facilit
y
bear interest at 20% pa
y
abl
e
quarterly in arrears and payable in kind, or PIK, beginning
December 31, 2008 until the third anniversary of the effective
date and therea
f
ter 20
%
pa
y
able quarterl
y
in arrears in cash. I
f
t
he First Lien Senior Facilit
y
has not been refinanced in full b
y
t
he third anniversary of the effective date, then until suc
h
r
e
f
inancin
g
has occurred 70
%
o
f
the interest due will be payabl
e
i
n cash with the balance pa
y
able in PIK. This table assumes that
th
e
PIK i
nterest w
ill b
epa
id
at matur
i
ty
.
I
nterest related third lien convertible notes
.
Subject to
conversion, repayment or repurchase of the
C
onvertible Notes,
amounts under the
C
onvertible Notes bear interest at 20% that
accrues and compounds quarterl
y
until October 30, 2011 a
t
w
hi
c
h
t
i
me suc
h
accrue
di
nterest ma
yb
epa
id i
n cas
h
.
A
n
y
accrued interest not paid in cash on such date will continue t
o
b
ear interest at 20% that accrues and compounds quarterly and
is pa
y
able in cash on the maturit
y
date of the
C
onvertible Notes.
A
fter October 30, 2011, principal on Convertible Notes will bea
r
interest at 20% payable quarterly in arrears in cash. However, i
f
t
he First Lien
S
enior Facilit
y
has not been refinanced in full b
y
October 31, 2011, then until such refinancing occurs, the cas
h
interest will be capped at 14% with the balance of 6% accruin
g
and compoundin
g
interest quarterly at 20%, to be paid in cas
h
on the maturit
y
date of the Convertible Notes. This tabl
e
assumes t
h
at a
ll
accrue
di
nterest not
p
a
id
w
ill b
e
p
a
id
a
t
m
atur
i
t
y
.
C
apital lease obligations
.
A
t
D
ecem
b
er 31
,
2008
,
we
h
a
d
capital lease obli
g
ations of $37,042 related to our corporat
e
h
eadquarters in Holmdel, New Jerse
y
that expire in 2017.
O
peratin
g
lease obli
g
ations. At December 31, 2008, futur
e
commitments for operating leases included
$
2,389 fo
r
co-location facilities in the
U
nited
S
tates that accommodate
a
portion of our network equipment throu
g
h 2010, $1,335 fo
r
kiosks leased in various locations throu
g
hout the United States
4
0
VO
NA
G
E ANN
U
AL REP
O
RT 2008