Approves Sale of Exodus
Digital Island unit of Cable & Wireless is purchaser
Jan. 17, 2002 -- A U.S. Bankruptcy Court has approved the
sale of the assets of Exodus Communications to Digital Island,
the U.S. Web services unit of the British telecom giant Cable
& Wireless plc, the companies said today.
Nov. 30 Cable & Wireless announced its intention to acquire
most of Exodus in a deal valued at approximately $850 million.
The agreement covers "a substantial portion of (Exodus')
business and assets"
That includes 26 of Exodus' 35 U.S. data centers. A separate
agreement will cover the sale of Exodus' two facilities in London
and one apiece in Frankfurt and Tokyo.
The transaction is expected to close during late January/early
February 2002. The agreement remains subject to customary closing
Exodus filed for Chapter 11 bankruptcy protection on Sept.
26, saying it had overexpanded as it pursued market share. Krause
was appointed in September to succeed longtime chairman and CEO
Under Hancock's leadership, the company grew rapidly during the
dot-com boom times, but saw its financial condition deteriorate
as the Internet and telecom industries slowed dramatically.
In recent months Exodus has worked hard to retain customers,
with a steady stream of assurances that there would be no business
interruptions. It started consolidating underutilized data centers,
which meant moving customers to other Exodus centers.
Some of Exodus' marquee clients have begun housing
equipment with new web hosts to spread their risk. Yahoo!, the
Internet's busiest portal, this week chose Sprint as its new web
host, following a similar move by giant auction site eBay. Weather.com
relocated its servers to WorldCom late last year.
has not publicly identified which data centers will be sold to
Digital Island and which will be consolidated. Most of the 11
Global Center facilities Exodus acquired last January have been
handed back to Global Crossing, which continues to guarantee many
of the leases.
The two companies recently negotiated an agreement in which
Global Crossing would take over lease payments on 10 former Global
Center facilities, and then advise Exodus on which leases to assume