Chicago-based MarchFirst, which has been mum on reports of expected job cuts during recent weeks, began laying off several employees late last week, offering most only a two-week severance package.
In Monday's statement, MarchFirst also detailed the terms of the sale of its central regional operations to Divine and said it is actively pursuing the sale of other business units.
MarchFirst also said it is shuttering its Australian operations as it continues to weigh other financial options. The company has recently been battling a dramatic downturn for Internet-related consulting services and has been essentially limping without a solid executive management team.
The Nasdaq resumed trading Monday of MarchFirst shares. In afternoon trading, the stock was down 6 cents, or almost 40 percent, to 9 cents. Last Wednesday, the Nasdaq put a freeze on the company's shares and said trading would not resume until it had complied with a request for information. MarchFirst shares had been trading around 15 cents before the Nasdaq's official halt.
Like other players in the once blazing market for Web development and Internet consulting services, MarchFirst has had a difficult time adjusting to the rapidly changing times. Many analysts and industry observers had anticipated that the company would sell all or part of its operations to remain afloat.
On Friday, Divine said it signed an agreement to acquire several of MarchFirst's assets, including 20 offices and its SAP consulting practice, in a deal valued up to $120 million. German software giant SAP makes enterprise software that handles a wide range of business activities such as manufacturing, human resources and payroll. MarchFirst helped companies implement the software.
Most of the offices Divine agreed to buy were initially owned by management consulting company Whittman-Hart. MarchFirst was the name given to the company created after Whittman-Hart combined with Internet consulting company USWeb/CKS.
MarchFirst said Monday it expects to receive $6.25 million upon closing of the transaction, an additional $27.75 million note payable over not more than five years, and up to an additional $39 million payable over five years, depending on the performance of the various offices.
Regarding Divine's purchase of its SAP practice and other business units, MarchFirst said it intends to receive $6.25 million at closing, an additional $29.75 million note payable over not more than five years, and up to an additional $16 million payable over five years contingent on these units' future performance. Like its buyer, MarchFirst said it expects the deal to close promptly.
The Divine acquisition does include MarchFirst's application hosting business HostOne and its interest in venture capital arm Bluevector, but that part of the sale is subject to antitrust approval, the troubled Internet consultant said.
MarchFirst, which launched Bluevector a year ago, owned 50 percent of the company but wrote off the remainder of its investments in the fourth quarter. During the past few weeks, Bluevector's Web site has been inaccessible. Some sources have said only a few employees remain at the company.
Additionally, the consulting company, which has suffered several rounds of job cuts, said Monday it recently nabbed another payment extension for a loan it still owes American National Bank and Trust Company. It now has until June 15 instead of mid-April to settle the loan, which is valued at approximately $53 million.