Interland Negotiating With e.spire

Atlanta’s Interland, Inc. has confirmed that it is the unnamed company announced Monday that is in negotiations with bankrupt competitive local exchange carrier e.spire Communications, Inc. to acquire certain assets of e.spire’s web hosting subsidiaries, FloridaNet, Inc. and CyberGate, Inc. Any sale is subject to procedures and final approval by the U.S. Bankruptcy Court for the District of Delaware.

Earlier this week, the court approved procedures for the sale of CyberGate and set a Jan. 7 auction, including a lead bid of $21 million by a then anonymous Web hosting provider to acquire certain assets and to assume certain liabilities of the business.

Managing more than 300,000 paid hosted Web sites, Interland provides business-class Web hosting solutions for small and medium businesses, offering a portfolio of standardized Web hosting, e-commerce, and application hosting services, from basic Web sites to managed dedicated hosting solutions.

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 Jan. 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 company 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.

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