It is being reported that Interland, Inc. headquartered in Atlanta, GA (ticker symbol INLD) has agreed to sell the assets of its Hostcentric brand to the Caird Corporation for at least $3.4 million. Hostcentric was acquired by Interland 2 years ago in a deal valued at around $20 million in cash and stock.
An Interland press release dated June 13, 2003 posted at the company’s website quoted Interland’s CEO as saying, “The acquisition of the Hostcentric organization should have an immediately positive financial impact,” said Joel J. Kocher, Interland’s chief executive officer. “We are pleased to close the scale-driven acquisition chapter of Interland’s strategy with the consummation of this attractive transaction,” said Kocher.
A glance at the stock price after the acquisition on June 13, 2003 shows it traded for around $10.70 adjusted for dividends and splits. As of 11:00 am on May 12, 2005 the stock was trading in the range of $1.84.
According to the SEC filing form 8K by Interland, Inc.: ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œOn May 5, 2005, Interland, Inc. (“Interland”, or the “Company”) entered into an Asset Purchase Agreement (the “Agreement”) with Caird Corporation (the “Buyer”), pursuant to which the Buyer has purchased from Interland certain shared web hosting customer accounts, trademarks, domain names, and miscellaneous assets. In particular, the shared hosting accounts being sold consist of both shared hosting accounts that were part of the Hostcentric acquisition in June 2003 as well as accounts for customers who purchased shared hosting services under the Hostcentric brand thereafter (collectively, the “Accounts”).
The total purchase price for the Accounts is variable, depending on the success of the parties in migrating the accounts from the Company’s current hosting platform to the Buyer’s platform. A portion of the price, in the amount of $3.4 million, was paid upon the signing of the Agreement, and the balance will be paid in five monthly installments beginning with the second month following the date on which the Buyer begins to bill the Accounts directly. The Company expects that the first installment date will be September 15, 2005, but the first installment could be delayed to a later month if there is a delay in transitioning the Accounts to the Buyer’s billing system. The total purchase price is expected to be as much as $5.3 million, but will in any event not be less than $3.4 million. The Buyer’s installment payment obligations under the Agreement have been guaranteed by its sole shareholder.
For the quarter ended February 28, 2005, the Accounts produced approximately $1.2 million in revenue. Beginning in May 2005, Interland will cease recognizing revenue on the Accounts.
Substantially all of the Accounts were serviced through the Company’s Orlando, Florida facility. The Company plans to close the Orlando facility on or about July 1, 2005 and terminate approximately 35 employees in connection with that closure. The closure of the Orlando facility is not expected to result in any material closing costs or balance sheet adjustments.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â
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