Breakaway Solutions (Nasdaq: BWAY)traded Tuesday morning at US$1.28, up 16 cents, after the company said itreceived $33 million in financing to help it continue its push towardprofitability.
The company said it has already received $3 million of the equity financing,with the remainder subject to shareholder approval and other conditions. Thelenders have agreed to provide interim funding of up to $12.5 million, thecompany said.
Breakaway also said it is in the final stages of cost-cutting measures, including 108 layoffs and a reduction in selling, general andadministrative expenses. The moves are aimed at reducing costs by $45million per year, the company said.
“This capital infusion provides us with the means to continue our pushtowards and achievement of profitability and the long-term vision of our FSPmodel,” said Gordon Brooks, chairman, president and chief executive.
The company calls itself a “full service provider,” or FSP, specializing indefining, creating and operating online businesses. Breakaway’s new customers include Parametric Technology, The Hartford, and PacifiCare.
SCP Private Equity Partners will provide $20 million of finding, withInternet Capital Group (Nasdaq: ICGE) providing a $10 million equityinvestment. Internet Capital is converting debt into equity as part of theagreement.
Breakaway said it expects the deals to close in early April.
Although the current marketplace is “unsettled,” SCP partner Wayne Weisman, whowill be joining the Breakaway board as part of the agreement, believes that Breakaway Solutions and its FSP model will “emerge from the current marketshakeout as one of the real winners.”
Said Weisman: “We have followed Breakaway Solutions very closely and it is clear that the company is winning the Global 3000 deals it needs to succeed. Our capital will help the company continue to penetrate that market.”