iXL Plots Path Back from Brink
Page 1 of 2
Net consultancy iXL Enterprises Thursday unveiled a slew of financial and strategic initiatives focused firmly on one goal: Achieving EBIDTA profitable operations within the first half of 2001.
"By taking decisive action now, we believe we complete our turnaround, attain our EBIDTA profitability goal early next year, and iXL will emerge as a much stronger company going forward," said Bert Ellis, chairman and chief executive officer of iXL.
Internet consulting companies like iXL and rivals Razorfish and Viant have been suffering under new market conditions. Last month iXL laid off about 850 employees, said it would close or sell seven offices, and also announced plans to liquidate selected assets.
The first piece of iXL's plan to attain EBIDTA profitability is a deal with ProAct Technologies Corp., formerly Consumer Financial Network, which advanced iXL $20 million in exchange for the rights to acquire 10 percent -- about 10 million shares -- of iXL's interest in ProAct. The company also granted ProAct the option to snap up an additional 10 percent of iXL's interest for $30 million. ProAct, a provider of integrated employee benefit, human resources and life planning solutions, is one of more than 20 iXL Ventures companies.
"We have significant value in our stake in ProAct Technologies," Ellis said. "By this single transaction, we will have raised $20 million in cash, and we still own over 90 million shares [40 percent] of ProAct. I believe ProAct is a very valuable company with its own cash reserves in excess of $100 million. Moreover, I continue to be optimistic about the future potential of ProAct and therefore the value of our stake in ProAct. We will continue to work closely with ProAct as an investor, partner, client and vendor."
Ellis said the transaction was a confirmation of iXL's belief in the value of its portfolio of companies, adding that there is significant value in its other portfolio companies, especially AppGenesys, CyberStarts, Digital Planet and Sekani.
The second piece of the puzzle was the forging of an agreement in principle for off shore services from SEI-CMM Level 5 IT services provider HCL Perot Systems (HPS). iXL said HPS will supplement its existing core engineering capabilities with expertise in e-commerce, Web technology, rapid application development, re-engineering and migration, legacy system maintenance and enterprise integration. iXL agreed to procure $65 million of HPS software engineering and IT capacity over the next three years and HPS will offer iXL preferred pricing, priority scheduling and customized capabilities via SEI-CMM Level 5 dedicated iXL development centers within HPS facilities in Noida and Bangalore, India. In exchange, iXL will sell HPS one million shares of iXL common stock for $3 million.
"We will offer clients powerful, end-to-end solutions by combining the best of iXL's content, systems integration, strategy and program management engineering capabilities with HPS' strength in detailed design and programming," Ellis said. "Having an SEI-CMM Level 5 off-shore partner like HPS opens tremendous business development opportunities to us. Our operating and managerial style and our industry verticals match up very well with HPS. This combination of iXL and HPS skills will permit iXL to better manage and deliver the increasingly complex work we are being asked to do for our existing clients and will further enable iXL to pursue even larger, more complex and more challenging work for new clients in our key industry verticals."
iXL also amended and renewed its $50 million working capital facility. Chase Manhattan Bank is the administrative agent of the facility.
The company also opened a stock-purchasing window for senior management, company directors and employees to buy iXL stock on the open market. iXL said the window would remain open through the end of December, and Ellis announced plans to purchase a signific