The U.S. Bankruptcy Court for the District of Delaware has approved the sale of e.spire Communications, Inc.'s (Quote) Florida-based Internet subsidiary, CyberGate, Inc., to e.spire chairman George F. Schmitt for approximately $23 million.
Opening bids were received Tuesday morning at the New York offices of Credit Suisse First Boston and the auction was held at the law offices of Saul Ewing LLP in Wilmington, Del., in the afternoon.
The court approved the sale at a hearing late yesterday afternoon. According to the terms of the purchase agreement the sale will close on or about Jan. 23 and Schmitt will take full control of CyberGate at that time.
CyberGate's subsidiary, ValueWeb, offers a line of shared and dedicated Web hosting, co-location, and related managed services. Hosting more than 120,000 domains for customers in more than 136 countries, ValueWeb is one of the largest Web hosting companies in the world.
The Herndon, Va.-based e.spire's board of directors recommended approval of the deal. The additional cash will be important as negotiations of exit financing continue and a business plan is finalized for emergence from Chapter 11 bankruptcy protection, for which the company voluntarily filed on March 22 of this year.
"e.spire is pleased to realize this sale at a time when we are considering our exit strategy. We will use the funds both as working capital and to permanently reduce the total amount of our debtor-in-possession loan, taking us one step closer to emerging from Chapter 11," said e.spire Chief Financial Officer Bradley E. Sparks. "CyberGate has been an important asset for us over the past few years, and we think this sale is a strategic move that will benefit both companies."
Tomas V. Mikaelsson will remain as president of the Fort Lauderdale, Fla.-based CyberGate and continue to manage day-to-day operations.
"We plan to make operational changes at CyberGate, and we intend to merge the company with similar businesses to build a larger and stronger enterprise," said Schmitt.
e.spire's core business is providing local and long distance telephone service to small to medium sized businesses.
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