Vonage talks $300 million five-year convertibles to yield 1.5%-2%, up 40%-45%

By Abigail W. Adams

Portland, Me., June 10 – Vonage Holdings Corp. plans to price $300 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 40% to 45%, according to a market source.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the bookrunners for the Rule 144A offering, which carries a greenshoe of $45 million.

The notes are non-callable until June 5, 2022 and then subject to a 130% hurdle with a make-whole.

In connection with the pricing of the notes, Vonage will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread, to repurchase up to $10 million in common stock and to repay a portion of its balance under its credit facility.

Vonage is a Holmdel, N.J.-based cloud communications provider.

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