PSINet Closes Sale of Unit | Adweek PSINet Closes Sale of Unit | Adweek
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PSINet Closes Sale of Unit

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ASHBURN, Va. -- PSINet Inc. completed the sale of its transaction solutions unit to an investor group led by GTCR Golder Rauner LLC for about $277 million, plus an additional $10 million in escrow for possible adjustments.

PSINet said Wednesday that it will record a loss of $340 million on the sale of the unit, which will be treated as a discontinued operation for financial reporting purposes. The company agreed to sell the unit last month.

The announcement comes a day after the Internet protocol data communications company warned that because of cash flow problems, it will likely file for Chapter 11 bankruptcy protection and may be delisted from the Nasdaq Stock Market.

PSINet, which also cautioned that it may record fourth-quarter restructuring and impairment charges, hasn't finalized full-year 2000 financial statements and won't file its Form 10-K within the prescribed period as a result of rapidly changing circumstances.

The announcement confirmed growing speculation that the Internet access and e-commerce company was headed for bankruptcy-court protection. Last month PSINet (PSIX) warned investors that its common stock could be worthless and hired financial adviser Dresdner Kleinwort Wasserstein to restructure its roughly $3.4 billion in debt in an effort to avoid defaulting on its payments to creditors.

In November, the company hired Goldman Sachs & Co. to help it review strategic alternatives, including a possible sale.

PSINet Wednesday reiterated that its cash resources and any cash generated from additional asset sales, even with the proceeds from the transaction solutions unit, may not be sufficient to meet its anticipated cash needs without successful implementation of one or more financial or strategic alternatives currently under consideration.

The company also has noted that there can be no assurance that it won't run out of cash or that its restructuring efforts will succeed.

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