Interoute will acquire the company's PSINet Europe operations in Germany, France, Belgium, Switzerland and The Netherlands, and its VIA NET.WORKS operations in Spain, France and Germany for $18.1 million in cash at closing. The sale will include certain assets and liabilities pertaining to VIA's centralized back-office financial, network management and technical support systems held by the group parent VIA NET.WORKS, Inc. VIA will remain responsible for its corporate headquarters staff, other than those employees offered employment by Interoute, and all liabilities and expenses of the group parent. The sale is subject to approval by VIA's shareholders.

VIA and Interoute have entered into a management services agreement under which Interoute will consult with VIA on opportunities for integration of the businesses to be acquired into Interoute's operations and to provide advice and assistance in relation to VIA's commercial activities.

Interoute has committed to provide a $7.2 million secured bridge financing facility, of which $2.2 million will be used to fund VIA's subsidiary company operations and $5.0 million will be used to provide VIA funds to pay the corporate operating costs and certain accrued liabilities. At closing, the purchase price of the transaction would be reduced by the amount the VIA has drawn down on the $5.0 million facility only.

Interoute has invested $2.8 million in preferred and common stock of the company. Interoute also received shares of common stock of the company in lieu of cash as a pre-paid fee for the management services it will provide and as a loan commitment fee. As a result of these issuances, Interoute now holds approximately 46% of the voting interests of the company, comprised of 5,454,545 shares of a newly authorized class of preferred stock of the company designated Series A Convertible Preferred Stock, and 35,810,811 shares of common stock, or approximately 33% of the common stock of the company after issuance of the shares.