RealTime IT News

Court Sets Auction Date for e.spire Internet Subsidiary

The U.S. Bankruptcy Court for the District of Delaware has approved procedures for sale of e.spire Communications, Inc.'s Internet subsidiary, CyberGate, Inc., and plans a January 7 auction. The court also approved a lead bid of $21 million by an unnamed Web hosting provider to acquire certain assets and to assume certain liabilities of the business.

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.

Opening competitive bids for the auction must exceed the lead bid by a minimum of $500,000 and be received in writing prior to 8 a.m. on January 7 by Credit Suisse First Boston Corp. in New York City.

Last week, the Herndon, Va.-based e.spire said its board of directors had authorized e.spire management to begin negotiations with creditor constituencies on a term sheet received from an undisclosed lender for exit financing. With a term sheet in hand, e.spire can now begin final negotiations with its creditors and prepare a plan of reorganization.

"With a viable term sheet on the table, we are a step closer to emerging from Chapter 11," said e.spire Chairman George F. Schmitt. "We will now approach our creditors with a proposed plan of reorganization and work out the details."

The bankrupt competitive local exchange carrier expects to sign a term sheet and file its plan of reorganization with the court within 60 days. e.spire filed a voluntary petition for Chapter 11 protection on March 22.