NaviSite announced that its parent company CMGI and Compaq Computer will help the Web hosting company shore up its financial position. CMGI will give NaviSite $10 million in cash that can be converted into NaviSite stock. Compaq, through its subsidiary Compaq Financial Services, will give NaviSite about $55 million, $20 million of which will be in a cash note convertible into NaviSite stock, and $35 million which will be in a convertible note that allows NaviSite to restructure its debts to Compaq.
The deal also permits Compaq to convert the notes into stock over the next six years and receive a controlling ownership in Navisite, according to a filing with the Securities and Exchange Commission. Kevin Lo, NaviSite's vice president of products, services and business development, says the stake would be more than 60 percent and adds that 70 percent of the company's servers come from Compaq.