British telecom giant Cable & Wireless is closer to exiting the U.S. market after a flurry of moves announced Monday.
The company’s Cable & Wireless America (CWA)
subsidiary has agreed to sell its hosting and Internet protocol assets to Gores Technology Group for $125 million — a higher figure than some investors and industry watchers expected.
In conjunction, CWA, of Reston, Va., filed for Chapter 11 bankruptcy protection.
“It’s not a done deal yet, because under the process, other companies can still come in and bid more,” C&W spokesman Chad Couser told internetnews.com.
If no other buyers are interested, the Gores sale is expected to close in February.
To assist CWA in operating through the transaction, its parent extended $100 million in new financing and tapped John S. Dubel as CEO and Eric A. Simonson, as CFO. Both are principals of AlixPartners and have worked with WorldCom and Acterna. They will be responsible for any final negotiations regarding the sale.
In coming months, CWA will continue to consolidate its network and 1,700-person workforce. Reductions have been underway for more than a year.
During the late 1990s, CWA expanded quickly in the United States and elsewhere, but it was soon hit with a one-two punch: plummeting revenues caused by the economic slump; and an unsuccessful $850 million gamble on Exodus Communications, a bankrupt provider of Web hosting and content delivery services. In all, Cable & Wireless sunk more than $1 billion in its U.S. push.
For Los Angeles-based Gores, the deal is the latest in a string of opportunistic buyouts. Since its founding in 1987, the privately-held firm has bought and managed more than 40 hardware, software and IT services firms.