Vonage Holdings, a provider of cloud communications services for businesses, has completed the acquisition of privately-held Nexmo for $230 million and closed on an expanded $450 million credit facility. San Francisco-based Nexmo provides application program interfaces for text messaging and voice communications. Of the consideration, $195 million was paid at close, consisting of $163 million of cash and approximately 6.8 million in shares of Vonage common stock valued at $32 million.

On June 3, 2016, Vonage Holdings Corp. entered into Amendment No. 1 to the Amended and Restated Credit Agreement (the “2016 Amendment”), by and among Vonage America Inc., a Delaware corporation (“Vonage America”), Holdings (together with Vonage America, the “Borrowers”), Citizens Bank, N.A., Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, SunTrust Bank, Keybank National Association, Santander Bank, N.A., Capital One National Association, First Niagara Bank, N.A. (together, the “Lenders”), and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent"), which amends that certain Amended and Restated Credit Agreement dated as of July 27, 2015 by and among the Borrowers, the Lenders and the Administrative Agent (as amended by the 2016 Amendment, and as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). The Credit Agreement consists of a $125 million senior secured term loan and a $325 million revolving credit facility.

The following description summarizes the material terms of the 2016 Amendment:

Under the terms of the 2016 Amendment, the lenders (i) provided $125 million in term loans, which were used in part to refinance the existing term loans which had an original amount of $100 million, and (ii) increased the revolving credit commitments by $75 million, from $250 million to $325 million. The loans and the credit commitments under the Credit Agreement will mature in May 2020. Principal amounts under the Credit Agreement are repayable in quarterly installments of $4,687,500 for the senior secured term loan. The unused portion of the revolving credit facility incurs a 0.45% commitment fee. Such commitment fee is subject to a sliding scale and will be reduced to (a) 0.40% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, (b) 0.375% 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 (c) 0.35% if our consolidated leverage ratio is less than 0.75 to 1.00.

Outstanding amounts under the Credit Agreement, at our option, will bear interest at:

• LIBOR (applicable to one-, two-, three-, six-, or twelve-month periods) plus an applicable margin equal to (a) 2.50% if our consolidated leverage ratio is less than 0.75 to 1.00, (b) 2.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, (c) 3.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, and (d) 3.25% if our consolidated leverage ratio is greater than or equal to 2.50 to 1.00, with such interest 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 prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate from time to time plus 0.50%, and (c) the adjusted LIBO rate applicable to one month interest periods plus 1.00%, in each case plus an applicable margin equal to (i) 1.50% if our consolidated leverage ratio is less than 0.75 to 1.00, (ii) 1.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, (iii) 2.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, and (iv) 2.25% if our consolidated leverage ratio is greater than or equal to 2.50 to 1.00, with such interest payable on the last business day of each March, June, September, and December and the maturity date of the Credit Agreement.

Subject to certain restrictions and exceptions, the Amendment permits us to obtain one or more incremental term loans and/or revolving credit facilities in an aggregate principal amount of up to $100 million plus an amount equal to repayments of the senior secured term loan upon providing documentation reasonably satisfactory to the administrative agent.

Pursuant to the Amendment, we must also comply with the following financial covenants:

• a consolidated leverage ratio of no greater than 3.25 to 1.00 as of the end of the fiscal quarter of Holdings ending June 30, 2016 and for each of the three (3) consecutive fiscal quarters ending immediately thereafter; and
• a consolidated leverage ratio of no greater than 2.75 to 1.00 as of the end of any fiscal quarter of Holdings, commencing with the fiscal quarter ending June 30, 2017, with a limited step-up to 3.25 to 1.00 for a period of four consecutive quarters, in connection with an acquisition.

Vonage Holdings Corp. provides communications services connecting people through cloud-connected devices worldwide.