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Qwest, Koch Mull C&W Bids

Carrier Hotels Staff Posted Jan 15, 2004

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Qwest and Koch Data Centers LLC are in talks with Cable & Wireless about buying its U.S. hosting assets, but say they haven't been given enough info to prepare offers by the bid deadline at 5 p.m. tomorrow (Jan. 16). The two companies have sought an extension until Tuesday to submit bids, according to bankruptcy court documents filed today.

Both Qwest and Koch claimed that they had difficulty obtaining information about C&W's hosting customers, and need the additional time to prepare bids. A court-sponsored auction is scheduled for Wednesday.

Cable & Wireless America (CWA) filed for Chapter 11 protection Dec. 8 as part of an agreement to sell the hosting unit to Gores Technology Group for $125 million. Media reports have mentioned interest from other suitors, including Level 3 Communications, WilTel Communications, Oaktree Capital Management and Cerberus Capital Management.

The court papers filed by Qwest and Koch refer to "a number of other bidders" analyzing the Cable & Wireless assets, which include 15 data centers and more than 1,000 customers. Qualified bids must exceed the $125 million offer from Gores, which will then be able to raise its bid during the auction.

Qwest and Koch each want to be given until 5 pm on Tuesday (Jan. 20) to submit bids and participate in Wednesday's auction. The judge will consider the request in a teleconference set for 12:30 pm Friday.

CWA's hosting assets comes barely a year after it closed eight CyberCenter hosting facilities, which averaged 50,000 square feet apiece. At one time Qwest planned to build as many as 42 CyberCenters, funded partly by a $5 billion strategic alliance with IBM.

Qwest's filing suggests it is interested primarily in CWA's customers, which it would then transfer to its own network facilities.

Little information about Koch Data Centers, LLC was included in its court documents. Affiliates of Koch Industries, Inc. , a conglomerate based in Wichita, Kansas, have been actively evaluating data center deals for some time, and last year invested in Collocation Solutions, a Dallas provider of colocation and managed services.

C&W announced its intention to exit the US hosting market back in June, and has since closed eight US data centers and reduced staffing by 1,000 workers.