CyberCash Inc. will receive more than $20 million for most of its assets and operations, more than twice what had been expected last month when it filed for bankruptcy.
The Reston company, which provides service to process credit card payments electronically, filed for Chapter 11 bankruptcy protection in March and agreed to sell its equipment, software and other operational assets to Network 1 Financial Corp. of McLean for $8 million.
After the filing, however, other bidders for CyberCash's operations surfaced, and an auction was held Wednesday under rules set by the bankruptcy court. A verbal auction narrowed the field to two bidders whose offers were slightly more than $20 million each, with negotiations continuing late into Wednesday night.
Yesterday CyberCash executives reviewed the two highest bids to determine which transaction would be best.
"We want to make sure that we've got a committed purchaser and we have a speedy closing," John Karnes, the chief financial officer of CyberCash, said at the time.
As of last night, the winner had been determined, but Karnes would not disclose the company, pending an announcement today.
A Delaware bankruptcy court must approve the final deal. After the sale of its operational assets is completed, CyberCash intends to liquidate other investments, pay off debts and shut down, distributing any remaining proceeds to shareholders.
The transaction will represent the denouement of one of the region's earliest Internet stars. CyberCash was founded in 1994. It went public in 1996 but never found financial success with its technology for "micropayments," or payments for very small transactions over the Internet.
In the past three years, the company has shifted to the more conventional business of processing credit card transactions. In December the company announced plans to merge with Network 1 but couldn't raise enough money to continue operating long enough to close the deal.
The auction process yielded $12 million more -- a 150 percent premium -- than the plan announced in March under which CyberCash would sell its operations out of bankruptcy to Network 1 for $8 million.
"It's rewarding that a number of people recognized that CyberCash is a valuable company that has a lot of opportunity," Karnes said.
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