May 20, 2003 -- (WEB HOST INDUSTRY REVIEW) -- Managed IP services firm SAVVIS Communications (savvis.com) said yesterday it would sell its St. Louis data center to Reuters, a major media company, for $35 million in order to strengthen its balance sheet.
SAVVIS said it would lease back one-third of the center "on attractive financial terms" for 10 years, and that Reuters has agreed to award certain bid preferences to the company. SAVVIS in turn agreed to reduce Reuters' minimum purchase commitments under an existing network services agreement.
As a result of the transaction, SAVVIS said it would use $12.9 million of the proceeds of the sale to reduce its debt to about $50 million. The company added that the purchase would facilitate further strategic investments like its recent purchase of Intel Online Services' hosting assets, which SAVVIS said yesterday had expanded its hosting footprint to seven centers and boosted its hosting customer base by approximately $24 million in annual revenue over the past half year.
"This 100,000 square foot center was initially built to the most stringent requirements for financial services applications, so it is well suited to Reuters' purposes and is an excellent venue for both current and future SAVVIS clients," said Rob McCormick, chairman and CEO of SAVVIS.
The companies expect the transaction to close in June.
