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USi Completes Reorganization With Interpath Merger

USi, Inc., the application service provider (ASP) that filed for Chapter 11 bankruptcy in January, has completed with its reorganization plan with an $81.25 million investment from an affiliate of Boston-based Bain Capital. Under the terms of the deal, USi is merging its operations with Interpath, another ASP in which Bain Capital owns a controlling interest.

The merger creates the nation's largest ASP with more than 130 customers and combined revenues of nearly $150 million in 2001. Andrew Stern, chief executive officer (CEO) of USi, will become chairman and CEO of the combined company, which will be headquartered in Annapolis, Md. Integration of the two companies will commence immediately and is expected to be completed shortly.

"Over the last 18 months, USi has made significant progress in improving and strengthening the operational side of the business, being the first in the industry to become EBITDA positive, while delivering the highest service levels in our history," said Stern. "With the balance sheet restructuring complete, a fully-funded business plan in place, and an operational merger with Interpath underway, USi will be able to grow the business and execute against the dramatic potential of the market we serve as the industry leader."

The Research Triangle, N.C.-based Interpath partners with customers to offer application development, integration and hosting solutions and services. Interpath's applications expertise, combined with its data and operations centers, offers customers a single source for application development, management and hosting.

"Long on experience, with great technical ability and stellar employees, the combined company will share a service-oriented culture built on a tradition of service excellence," added Stern. "This merger will enhance our financial strength, improve our ability to attract prospects, and allow us to build on our leadership advantage."

USi's portfolio of service offerings include software from Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft, and Siebel as a continuously supported, flat-rate monthly service via global data center network. Additionally, USi's AppHost managed application hosting services provide advanced solutions for enterprises, software companies, marketplaces, public sector clients and system integrators.

"USi and Interpath have a long history of providing superior services to their customers, and have played an integral part in the evolution of the ASP industry," said Andrew Balson, managing director of Bain Capital. "Combining these two companies confirms USi's market leadership position, creating a firm with industry leading technology and a sound economic model."

Bain Capital is a global private equity firm that manages several pools of capital including private equity, high-yield assets, mezzanine capital and public equity with over $12 billion in assets under management. Since its inception in 1984, the firm has made private equity investments and add-ons in over 225 companies, in a variety of industries, including technology and communications, healthcare, consumer goods and industrial products.