PSINet Sells Inter.net Subsidiary

Consumer ISP Inter.net's top management team leads buyout group and plans to concentrate on emerging Internet markets. PSINet will focus on corporate business and services.

by Roy Mark of www.internetnews.com [March 2, 2001]

Financially troubled PSINet Inc. (NASDAQ:PSIX), which has been seeking a buyer or strategic partner for months, is selling its Inter.net Global Ltd., a worldwide consumer Internet service provider, to the Inter.net management team led by Kurt Baumann and David Browning. The transaction encompasses consumer and small business access and content activities in more than 15 countries. Terms of the transaction were not disclosed.

Baumann and Browning initiated the spin-off of PSINet's consumer Internet activities over a year ago and were joined in the initiative by Gaige Paulsen, chief technology officer of Inter.net and Jorge Forgues, chief financial officer of the company. Over the past nine months, these four have assembled a team of Internet entrepreneurs to lead each local operation. Many of these entrepreneurs sold their original Internet companies to PSINet and have now become part of the Inter.net global team.

"We believe the true strength of the Internet is its ability to connect people of similar interests regardless of where they are geographically, culturally, or otherwise," said Baumann. "We intend to focus on this as a theme, avoiding the 'in your face' commercialism that has become so prevalent the past 5 years."

Inter.net was created by joining together all of PSINet's consumer Internet and portal businesses. The company has approximately 1,100 employees and generated $23.6 million in the third quarter of last year.

PSINet will retain a minority ownership position in Inter.net Global. Baumann and Browning will co-head Inter.net Global.

"PSINet is the leading global Internet service provider focusing on the needs of the corporate market. The transaction announced today completes our previously announced strategy to spin-off Inter.net, and allows us to focus our energies on PSINet's corporate customer base," said William L. Schrader, chairman and chief executive officer of PSINet. "Kurt and David have demonstrated that they have the ability to make a success of this business. We wish them well and hope for their success."

Inter.net Global has a business model founded on monthly subscriptions for quality access, ease of use, integrated tools (email, chat, instant messaging, etc.) and localized content via country specific portals.

"Our greatest market opportunities will be on maintaining or establishing leadership positions in the emerging Internet markets of Eastern Europe, Latin America, and South Asia," said Browning. "However, having our successful businesses in Japan, North America and Europe provides us with product and services experience very helpful in the emerging markets."

Inter.net maintains a Web site at http://www.inter.net while PSINet can be found at http://www.psinet.com.

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