Bankrupt competitive local exchange carrier e.spire Communications, Inc. 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 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.
The 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 of exit financing continue and a business plan is finalized for emergence from Chapter 11 bankruptcy protection, for which the company voluntarily filed 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.