e.spire Communications Inc. (www.espire.net) anticipates filing a reorganization plan with the U.S. Bankruptcy Court in Delaware within the next 30 to 45 days, a spokeswoman said, following the court-approved sale earlier this week of its web hosting subsidiary, CyberGate Inc.
Telecom veteran George F. Schmitt, chairman and CEO of e.spire, made the winning $23 million bid for CyberGate as a private citizen, outbidding web hosting provider Interland Inc. (www.interland.com).
Florida-based CyberGate has roughly 80,000 business customers and Schmitt plans to merge the company with similar businesses.
While e.spire has no other sales pending, company executives acknowledge that the CyberGate sale helps move along the bankruptcy proceedings.
Currently, an unnamed investor is discussing exit financing with e.spire. Although spokeswoman Peggy Disney would not reveal the investor's name, she said e.spire now has the means to approach a creditor's committee to negotiate a restructuring arrangement.
"e.spire is pleased to realize this sale at a time when we are considering our exit strategy," said e-spire CFO Bradley E. Sparks. "We will use the funds both as working capital and to permanently reduce the total amount of our debtor-in-possession loan, taking us one step closer to emerging from Chapter 11."
e.spire, which filed for voluntary Chapter 11-bankruptcy protection in March 2000, has about $1 billion in debt.
In recent months, other large competitive local exchange carriers, such as Santa Clara, Calif.-based Covad Communications Co. (www.covad.com) and Englewood, Colo.-based ICG Communications Inc. (www.icgcom.com), also have announced plans to reemerge from bankruptcy.
Last month, Covad officially reemerged from bankruptcy after eliminating $1.4 billion in debt and receiving financing from SBC Communications Inc. (www.sbc.com). ICG, meanwhile, filed a plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware last month.
