A US bankruptcy court has approved the sale of Cable & Wireless's US web hosting and IP services business to managed services provider Savvis Communications. The transaction is expected to close next month.
Savvis will acquire almost all of CWA's assets for $155m in cash and assume liabilities of approximately $12.4m.
Last December, C&W placed CWA into Chapter 11 bankruptcy with the intention of selling most of the company to Gores Technology in Los Angeles, for $125 million.
As part of the bankruptcy process, however, qualifying bidders were given an opportunity to submit higher and better offers for CWA's evaluation in a court-supervised two-day auction held last week. Savvis was one of seven bidders for the CWA assets.
"This is not really a change in plan," said C&W spokesman Peter Eustace in London, "but rather the normal process taking its course."
CWA will continue normal operations pending completion of the sale, asserting that the company "remains focused on its core competencies of hosting and IP services while delivering uninterrupted service to its customers".
However, earlier this month, CWA reduced its customer base by about 400 in 11 cities, and those customers dropped from the service complained that they were notified by mail in December that they had 60 days to find another service provider or be cut off by 13 February.
CWA has not determined what will happen to its employees after the sale.
Laura Rohde and Grant Gross write for IDG News Service