e.spire to Sell Hosting Subsidiary

e.spire chairman makes bid to acquire one of the world's largest webhosting enterprises.

by Roy Mark of internetnews.com [December 10, 2001]

Bankrupt competitive local exchange carrier e.spire Communications, Inc. (OTC:ESPIQ) has signed an agreement to sell its Florida-based Internet subsidiary, CyberGate, Inc., to e.spire Chairman George F. Schmitt. To accomplish the sale, the company filed a motion with the U.S. Bankruptcy Court for the District of Delaware.

CyberGate's subsidiary, ValueWeb, offers a line of shared and dedicated webhosting, 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 webhosting companies in the world.

Herndon, Va.-based e.spire's board of directors recommended approval of the deal, which will add up to $15.5 million in cash to e.spire's cash reserves. The additional cash will be important as negotiations on exit financing continue and a business plan is finalized for emergence from Chapter 11 bankruptcy protection (the company filed for Chapter 11 on March 22 of this year).

"e.spire wants to sell CyberGate and I have decided to buy it because I think it is a valuable asset and an excellent investment," said Schmitt, who will continue to run e.spire.

Tomas V. Mikaelsson will remain as president of the Fort Lauderdale, Fla.-based CyberGate and continue to manage day-to-day operations. No major operational changes are planned at this time.

The motion in bankruptcy court requests expedited approval of the sale procedures, which include a procedure for the submission of competitive bids and the scheduling of an auction and a hearing to consider approval of the sale.

e.spire's core business is providing local and long distance telephone service to small to medium sized businesses.

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