Stargate Center Sold

Cleveland ISP and hosting provider E-xpedient was the high bidder for the data center operation of Pittsburgh's Stargate.net in a bankruptcy court auction last week. E-xpedient will pay $2.9 million to acquire more than 7,000 commercial Internet access accounts and Stargate's data center, according to local media accounts. The deal gives E-xpedient a 25,000 square foot data center in Pittsburgh that Stargate purchased from Blue Cross of Western Pennsylvania in 2000.

Stargate was the largest ISP in the Pittsburgh area, at one time claiming 72,000 dial-up and DSL accounts. It filed for Chapter 11 protection in April after unsuccessful negotiations with a potential acquirer. At the time, Stargate CEO Marcus Ruscitto said the company was profitable, with $34 million in annual revenues, and characterized the filing as a tactic to restructure $22 million the company owed its bank lender, Fleet Bank.

In last week's bankruptcy auction, Stargate was sold off in three chunks for a total of $10 million. Earthlink purchased Stargate's residential ISP business for $6.5 million, while Pittsburgh area IT firm A.C. Coy Co. bid $535,000 for its professional services operation.

E-xpedient said it will continue the Stargate brand, which will function as a wholly-owned subsidiary of E-xpedient and "maintain a visible presence in the Pittsburgh and Erie markets." E-xpedient serves more than 29,000 business and residential customers in 18 major U.S. cities.