Vonage 2014 Annual Report Download - page 77

Table of Contents
VONAGE HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
F-22 VONAGE ANNUAL REPORT 2014
Note 6. Long-Term Debt and Revolving Credit Facility
A schedule of long-term debt at December 31, 2014 and 2013 is as follows:
December 31,
2014
December 31,
2013
2.875-3.375% 2014 Credit Facility - due 2018 $ 70,000 $ —
2.875-3.375% Revolving Credit Facility - due 2018 $ 67,000 $ —
3.125-3.625% 2013 Credit Facility - due 2016 $ — $ 23,333
3.125-3.625% 2013 Revolving Credit Facility - due 2016 $ — $ 75,000
Total Long-Term Debt and Revolving Credit Facility $ 137,000 $98,333
At December 31, 2014, future payments under long-term debt obligations over each of the next five years and thereafter are as follows:
2014 Credit Facility
2015 20,000
2016 20,000
2017 20,000
2018 30,000
Minimum future payments of principal 90,000
Current portion 20,000
Long-term portion $ 70,000
Acquisition of Telesphere
In connection with our acquisition of Telesphere, we financed
the transaction with $67,000 from our revolving credit facility.
August 2014 Financing
On August 13, 2014, we entered into a credit agreement (the
“2014 Credit Facility”) consisting of a $100,000 senior secured term loan
and a $125,000 revolving credit facility. The co-borrowers under the
2014 Credit Facility are us and Vonage America Inc., our wholly owned
subsidiary. Obligations under the 2014 Credit Facility are guaranteed,
fully and unconditionally, by our other material United States subsidiaries
and are secured by substantially all of the assets of each borrower and
each guarantor. The lenders under the 2014 Credit Facility are
JPMorgan Chase Bank, N.A., Citizens Bank, N.A., Silicon Valley Bank,
SunTrust Bank, Fifth Third Bank, Keybank National Association, and
MUFG Union Bank, N.A. JPMorgan Chase Bank, N.A. is a party to the
agreement as administrative agent, Citizens Bank, N.A. as syndication
agent, and Silicon Valley Bank and SunTrust Bank as documentation
agents. J.P. Morgan Securities LLC and Citizens Bank, N.A. acted as
joint lead bookrunners, and J.P. Morgan Securities LLC, Citizens Bank,
N.A., Silicon Valley Bank, and SunTrust Robinson Humphrey Inc. acted
as joint lead arrangers.
Use of Proceeds
We used $90,000 of the net available proceeds of the 2014 Credit
Facility to retire all of the debt under our 2013 Credit Facility. Remaining
proceeds from the senior secured term loan and the undrawn revolving
credit facility under the 2014 Credit Facility will be used for general
corporate purposes. We also incurred $1,910 of fees in connection with
the 2014 Credit Facility, which is amortized, along with the unamortized
fees of $668 in connection with the 2013 Credit Facility, to interest
expense over the life of the debt using the effective interest method.
2014 Credit Facility Terms
The following description summarizes the material terms of
the 2014 Credit Facility:
The loans under the 2014 Credit Facility mature in August
2018. Principal amounts under the 2014 Credit Facility are repayable
in quarterly installments of $5,000 per quarter for the senior secured
term loan. The unused portion of our revolving credit facility incurs a
0.40% commitment fee.
Outstanding amounts under the 2014 Credit Facility, at our
option, will bear interest at:
> LIBOR (applicable to one-, two-, three-, six-, or twelve-month
periods) plus an applicable margin equal to 2.875% if our
consolidated leverage ratio is less than 0.75 to 1.00, 3.125%
if our consolidated leverage ratio is greater than or equal to
0.75 to 1.00 and less than 1.50 to 1.00, and 3.375% if our
consolidated leverage ratio is greater than or equal to 1.50 to
1.00, payable on the last day of each relevant interest period
or, if the interest period is longer than three months, each day
that is three months after the first day of the interest period,
or
> the base rate determined by reference to the highest of (a)
the federal funds effective rate from time to time plus 0.50%,
(b) the prime rate of JPMorgan Chase Bank, N.A., and (c) the
adjusted LIBO rate applicable to one month interest periods
plus 1.00%, plus an applicable margin equal to 1.875% if our
consolidated leverage ratio is less than 0.75 to 1.00, 2.125%
if our consolidated leverage ratio is greater than or equal to
0.75 to 1.00 and less than 1.50 to 1.00, and 2.375% if our
consolidated leverage ratio is greater than or equal to 1.50 to
1.00, payable on the last business day of each March, June,
September, and December and the maturity date of the 2014
Credit Facility.
The 2014 Credit Facility provides greater flexibility to us in funding
acquisitions and restricted payments, such as stock buybacks, than the
2013 Credit Facility.