Under the terms of the agreement with Engage, CMGI transferred to Engage all of the equity of Engage held by CMGI and cancelled all of the debt owed to CMGI by Engage. In consideration of the equity transfer and debt cancellation, Engage, among other things, (i) paid to CMGI $2.5 million in cash, (ii) agreed to pay to CMGI up to an additional $6.0 million, comprised of a senior secured promissory note due in September 2006 and earnout payments commencing in fiscal year 2004, and (iii) issued to CMGI a warrant for the purchase of up to 9.9% of the issued and outstanding shares of Engage Common Stock, at an exercise price of $.048 per share.
As we previously outlined, we are implementing a new business strategy for CMGI that includes investing in specific core areas, as well as restructuring or divesting of any underperforming and non-strategic assets. In July, we purchased the worldwide assets and operations of iLogistix, creating a global network of supply chain facilities and strengthening our eBusiness and Fulfillment segment. Today, as part of our commitment to reshape CMGI to better compete in the new market environment, we are taking another important step in the evolution of our company by divesting our equity and debt interests in Engage, said George McMillan, Chief Executive Officer of CMGI.
As a result of this transaction, the financial results of Engage, including its net revenues, pro forma operating losses, and cash and cash equivalents balances, will no longer be included in CMGIs consolidated financial statements.
CMGI has also sold NaviSite Inc. to Clearblue Technologies. The purchase price has not yet been disclosed. NaviSite’s net revenues, pro forma operating losses, and cash and cash equivalents balances, will no longer be included in CMGIs consolidated financial statements.
