After a long fight to hold onto its position as the largest pure-play ASP, USinternetworking filed for bankruptcy protection Monday.
The news comes as no surprise following a warning by Andy Stern, CEO of USi, that bankruptcy was a possibility if recapitalization negotiations did not go well with creditors.
Last October, Bain Capital Partners signed a letter of intent to invest $100 million in USi. To receive the money, USi and Bain needed to come to a mutually agreeable restructuring of the company's debt, and Bain would own all of USi's equity.
On Monday USi received a $106 million investment from Bain.
In a statement, USi said the bankruptcy filing is part of a pre-negotiated plan to eliminate the majority of the company's debt.
USi also said it plans to emerge from bankruptcy in the spring.
Bain follows a line of big-name investors to have attempted to bail out USi in the past. The ASP's capital intensive infrastructure buildout plan led to mounting debt and losses.
Microsoft was one such investor, participating in a $300 million investment round. Its stake was $50 million. Aether Systems invested $10 million and GE Capital $5 million.
For the quarter ended Sept. 30, USi reported a loss of $38 million, or 27 cents per share, on sales of $32 million. For the year-ago period, the company lost $48 million, or 49 cents per share, on sales of $28 million.
By mid-morning Monday, USi's stock was at 22 cents per share.