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To: ChrisJP who wrote (93449)	10/11/2001 2:02:17 PM
From: Jim Bishop	Read Replies (2) \| Respond to of 150070

PCOM good one, probably a morning gapper

To: ChrisJP who wrote (93449)	10/11/2001 2:17:59 PM
From: Jim Bishop	Read Replies (1) \| Respond to of 150070

USIX hmm, can it get back to .50 again today? Bain agrees to invest $100 mln in USi, shares surge By Eric Auchard NEW YORK, Oct 11 (Reuters) - USinternetworking Inc. <USIX.O> on Thursday said private equity firm Bain Capital agreed to invest $100 million in the software leasing company, sending its struggling stock surging more than 90 percent. Dave Miller, vice president of finance for the Annapolis, Maryland-based supplier of leased software services, said the investment would be substantially dilutive to existing shareholders and put Bain in control of most of USi's equity. In a statement, the company said the investment is contingent upon a number of conditions, including a balance sheet restructuring, regulatory approvals and due diligence. Nonetheless, shares of the company rallied, climbing to 50 cents from its Nasdaq close of 26 cents on Wednesday. The stock settled back in mid-morning trading to 45 cents, up 73 percent. "I am not going to try to explain why the stock is going up," Miller told Reuters in a phone interview following the company's announcement. In July, the company had said it had hired an unidentified investment banker to explore strategic alternatives. Bain and USi will work together to restructure the balance sheet and implement a recapitalization plan for the company. The investment, upon completion, is expected to fund the company to the point where it can become "cash flow positive," it said. The company has previously said it expected to report positive earnings before interest, taxes, depreciation and amortization for its recently ended third quarter. USinternetworking has set no time-frame for when it would turn profitable, let alone "cash flow positive," which would entail covering the cost of EBITDA plus capital spending, working capital charges and debt service costs, Miller said. The company previously had said it was comfortable it could achieve revenue of around $30 million for its third quarter. Miller declined to comment on its earnings ahead of the release of its third-quarter report on Oct. 30. He also declined to discuss operational aspects of the business until a conference call after release of its results. Under terms of the deal, affiliates of Bain would invest $75 million in USi and make another $25 million available when USi meets certain milestones. The company's board of directors approved the plan on Oct. 8. "The equity to be issued in conjunction with the recapitalization is expected to comprise most of the company's equity," USinternetworking said. Miller said the financial structure is still being negotiated between the two companies. "At the end of this, I am confident that Bain will own substantially all the equity. It's going to be extremely dilutive to existing shareholders," he said. Current management, including the company's chairman and another of the company's original founders, were expected to remain in place once the Bain investment is completed. The company, which counted 850 employees at the end of the second quarter, cut an unspecified number of staff in September. Market research groups ranked USinternetworking as the leading so-called "application service provider," or ASP, in 2000. It delivers key business software such as e-commerce systems, sales and marketing software and other back-office computer plumbing tools to customers that include Blue Cross/Blue Shield of Michigan, Barclays Global Finance and the SEMA telecom services unit of Schlumberger Ltd. <SLB.N>, a spokesman said. ((-- Eric Auchard, New York newsroom, +1 646 223 6189)) REUTERS * end of story *