As part of the financial restructuring between the companies, Compaq will retire two CMGI promissory notes, representing total outstanding amounts of $220 million, issued by CMGI in 1999 related to the company’s acquisition of AltaVista. In exchange, CMGI will transfer to Compaq a combination of cash, CMGI common stock and CMGI’s interest in B2E Solutions LLC, a joint enterprise formed by Compaq and CMGI last year. The agreement also terminates AltaVista’s existing equipment leases with Compaq Financial Services, effectively freeing AltaVista from the remainder of future lease obligations in exchange for a one-time payment.
Additionally, CFS and CMGI will provide NaviSite with debt financing and CFS will restructure certain outstanding lease obligations. CMGI will also convert all of its outstanding notes and obligations into NaviSite common stock.
We are extremely pleased with this agreement. Importantly, the restructured terms allow CMGI to refocus critical financial resources on building our future business and achieving our overall target of reaching recurring operating profitability by Q4 of our current fiscal year, said David Wetherell, chairman and chief executive officer, CMGI, Inc.
This agreement strengthens NaviSite’s financial position, accelerates our path to profitability and solidifies our position within the Enterprise services market. We are focused on delivering operational excellence and high value-added solutions to our customers operating mission critical web applications. The economics of outsourcing are powerful, we’re seeing continued demand for our services and we believe this agreement strengthens our ability to establish leadership in an emerging market, said Tricia Gilligan, acting CEO of NaviSite.
SOURCE: COMPANY PRESS RELEASE
