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Bain Proposes $100 Million Investment in USi

Private investment firm Bain Capital Partners, LLC has executed a letter of intent providing for an equity investment of $100 million in USinternetworking, Inc. , the beleaguered application server provider based in Annapolis, Md. Under the terms of the letter of intent, affiliates of Bain would initially invest $75 million in USi, with an additional $25 million available upon achievement of certain business milestones.

The investment is contingent upon a number of conditions including, among others, a balance sheet restructuring, execution of definitive documentation, any necessary regulatory approvals, and final legal and accounting due diligence.

If the terms are met, the Boston-based Bain and USi would work together to restructure the balance sheet and implement a recapitalization plan. The equity to be issued in conjunction with the recapitalization is expected to comprise most of the company's equity. USi's board of directors approved the letter of intent on Monday.

The investment, upon completion, is expected to fund the company through cash flow positive, while maintaining a strong balance sheet. Last year, USi lost $190.3 million. It stock closed Wednesday at 26 cents a share.

"Bain Capital invests in growing companies with strong management teams and competitive advantages in promising industry sectors. Based upon our experience in the ASP industry, we are excited about the prospects for USi," said Andrew Balson, a managing director at Bain Capital.

USi delivers enterprise and e-commerce software as a service. The company's iMAP portfolio of service offerings delivers software from Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft, Plumtree and Siebel as a continuously supported, flat-rate monthly service via a global data center network.

"This vote of confidence in USi's business by one of the world's most prestigious private investment firms acknowledges the strength of the ASP value proposition and USi's leadership position," said Andrew A. Stern, chief executive officer of USi. "Bain's proposed investment addresses financial viability concerns that have limited our growth. USi can now focus its energies on growing the business and delivering the best enterprise ASP services available."