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New Funding For Critical Path

In a successful effort to clean up its balance sheet Critical Path Inc. , the San Francisco, Calif.-based provider of integrated messaging solutions, today announced the closure of $95 million in new funding.

Securing the equity financing transaction, will net the firm approximately $30 million in cash proceeds and eliminate $65 million of its five 3/4 percent Convertible Subordinated Notes. Critical Path will also issue approximately 52.4 million shares of new convertible preferred stock and warrants to purchase 2.5 million shares of its common stock.

Global private equity investment firm General Atlantic Partners LLC., is leading the new round of funding. The firm, which invests exclusively in the information technology and communications industry, will be responsible for purchasing the debt.

Other investors include a group of strategic financial and industry investors including Hong Kong-based Cheung Kong Limited and Hutchison Whampoa Limited, and global technology enterprise builder Vectis Group.

"This is an extremely important and timely investment for the company," says David Hayden, Critical Path's executive chairman. "Clearly, the capital invested helps accelerate our growth in the global messaging industry. Equally important, the credibility of these notable financial organizations is a real testament to investor confidence in our strong future," he adds

Bill Ford, Partner with General Atlantic says the firm is hopeful for Critical Path's future prospects: "Critical Path is uniquely positioned to capitalize on several powerful and intersecting trends in digital communications. The company's messaging and directory products form a highly strategic technology platform for security administration and web services. We are very excited about the company's growth prospects and its potential for leadership," he says.

However, Critical Path's announcement today of an agreement to settle it's pending shareholder and derivative litigation does have implications on the funding. Hayden says the funding of this equity financing is contingent on the execution of final settlement agreements in the litigation, but is happy that the firm can now put the case behind it:

"This closes an important chapter in Critical Paths history and represents a completed step in our turnaround," he says.

Critical Path says the $30 million in cash proceeds will significantly increase its cash balance, of $65.4 million (at September 30, 2001). In addition, the firm's total debt will be reduced to $37 million, which the firm says will remain outstanding.

According to Hayden, the cash proceeds will help increase sales for the firm and the development of the Critical Path Communication Platform, as well as expand the firm's geographic presence in both Asia Pacific and Latin America markets.

"This investment significantly strengthens our balance sheet and substantially supports our next stages of business growth and expansion," he says. "This financing ensures our viability as a technology business which we believe will support customers' confidence in the firm," he concludes.