Bankrupt Internet backbone PSINet Inc. has entered into a $10.2 million definitive share purchase agreement for the sale of PSINet Japan Inc. and certain of its subsidiaries to Cable & Wireless IDC Inc., a wholly owned subsidiary of Cable and Wireless plc. Because the transaction was structured as a stock purchase, Cable and Wireless also agreed to assume all liabilities and obligations of PSINet Japan.
The share purchase agreement provides, among other things, that the proposed transaction will be subject to the approval of the U.S. Bankruptcy Court. In addition, the share purchase agreement provides for a court supervised auction process at which other qualified bidders will be entitled to bid for PSINet Japan.
The Ashburn, Va.-based PSINet expects that its operations in Japan will continue to operate in the normal course of business. PSINet’s operating subsidiaries in Japan are not part of the filing by PSINet Inc. and certain of its U.S. subsidiaries under Chapter 11 of the U.S. Bankruptcy Code.
In June, claiming total liabilities of $4.3 billion, PSINet Inc., the pioneering wholesale Internet service provider that went on an aggressive acquisition binge over the last four years, filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Included in the filing are 24 PSINet operating subsidiaries in the U.S.
At the time of the filing, the Ashburn, Va.-based PSINet had total assets of $2.2 billion. Of the $4.3 billion in liabilities, $2.9 billion is bond debt. the companies involved in the filings had approximately $300 million of unrestricted cash, cash equivalents, short-term investments and marketable securities on hand. The company believes this cash balance will provide sufficient financial resources to fully fund operations during the anticipated restructuring period.
PSINet is a provider of Internet and IT solutions offering hosting solutions and a full suite of Internet services through wholly owned PSINet subsidiaries.
