UPDATE 1-Vonage extends debt financing commitment deadline

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NEW YORK, June 17 (Reuters) - Internet-based phone company Vonage Holdings Corp (VG.N) has extended the deadline to seal a $215 million private debt financing to June 23, according to a regulatory filing on Tuesday.

Investors have been waiting for a formal commitment on the deal after Vonage said in April that an unidentified financier had signed a nonbinding letter of intent to provide the money-losing phone company with the funding.

Vonage Chairman Jeffrey Citron told Reuters in early May that he expected a formal commitment in the second quarter. But sources have said that due diligence had become a drawn-out process due to the U.S. credit market jitters.

The deal was seen as crucial for Vonage to refinance $253 million in convertible debt redeemable in mid-December. Analysts believe that even if the company does win a commitment, the terms are likely to be harsh.

According to a filing with the U.S. Securities and Exchange Commission on Tuesday, Vonage extended the exclusivity period under the nonbinding letter of intent to June 23 from June 13 to allow negotiations on the terms to continue.

Vonage said it expected two-thirds of the financing to come from a senior secured credit facility and one-third through the issuance of convertible secured notes. However, it warned that terms could change and that there was no assurance that a deal will close.

The company was a pioneer in selling Web-based phone services. But subscriber growth has slowed as it cut marketing spending, and cancellations rose.

While the company's net loss narrowed in the first quarter, Vonage added only 30,000 subscriber lines, a sharp decline from 56,000 additions in the previous quarter and 166,000 in the year-earlier period.

Vonage shares have tumbled to less than $2 from their market debut at $17 in May 2006 on worries about competition from cable companies and other Internet-based phone service providers. It has also been hit by a series of patent lawsuits. (Reporting by Tiffany Wu and Ritsuko Ando; Editing by Gerald E. McCormick and Lisa Von Ahn)