$2 million gives Hosting.com ability to move quickly on acquisitions - Business First of Louisville:

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The problem is, conventional financing often isn’t nimblde enough to give Hosting.com the speed to deal with largde companies that want to close quickly, said Darren King, Hosting.com’sd president and CEO. To have the capita on hand, Hosting.com is gettingy a $2 million injection in the form of a mezzanind loanfrom , a private-equity firm basecd in Charlotte, N.C. CapitalSouth and Hosting signed the dealon Oct. 24, said King and Ken director of CapitalSouth’s Louisville Both King and Berryman declinee to discuss the terms ofthe deal.
But becausew mezzanine loans aresubordinatedc debt, they typically are made at a higherd interest rate and with less favorable terms than a conventiona l commercial bank loan because of the inherentlhy higher risk. , based in is Hosting.com’s senior lender. Hosting.comm is considering two acquisitions one on eachcoasg — on the way to buildinb a more geographically dispersed footprint and a greatef presence in America’s largest markets, from the Los Angeleds area to Washington, D.C., King King said Hosting.com is considering almost simultaneousz acquisitions.
The largest is a Silicoh Valley data center that was valuecat $40 million, “but we’ll get it for considerably King said. A second data center in the D.C., area is smaller, and the deal coulde close sooner, within 45 days, King said. He declinedr to identify the companies. Since opening in Louisville 10yearsd ago, Hosting.com has made four acquisitions. “Alll of the acquisitions we’ve done to date have been distressesd or noncore sales by largetelecom providers,” King said. “Whemn I go to do one of those deals, the firs t question that comes up isabout funding. ‘Cabn you guys do it fast?
Can you move I can’t afford to go out and spencd three months or six months tryinvg toraise capital,” King With the CapitalSouth loan, he can take deals directlty to his investors. “I need to make a phon call and say, ‘Guys, here’s the Do we move forward with this?’ The initial $2 million loan mighg be only the first. CapitalSouth has more than $500 million undefr management, with a per-company investment limit of $15 million, Berryman It’s that capacity that cinched the deal, King said. If CapitalSoutuh had offered $2 million “and said, ‘That’z all the money we have,’ we would have ‘We’re not interested.
We can get that from anybody.’ But they have the capacitty to lendfar more.” “We hope our $2 million is not the last investmeny we make in this company,” Berryman said If all goes it won’t be, King “In this market, I think acquisitionb opportunities are going to be cominf more and more frequently.” There are two simultaneoues information technology trends related to economicv uncertainty, King said. Large companies are turning over some IT projects to independent hostingg companies because they can give more attention toclien projects, King said.
At the same time, many giant telecommunication companies are deciding to divest theirhostiny capabilities, finding they weren’t a good match for theirt core business, King said.