[ISN] IDefense in Talks for Buyer

From: InfoSec News (isnat_private)
Date: Thu Feb 21 2002 - 02:10:06 PST

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    By Michael P Bruno, Washtech
    20 Feb 2002, 3:58 PM CST
    Online security firm iDefense Inc. of Chantilly is seeking a buyer and
    could sign a letter of intent within weeks, the company's chief
    executive said. The four-year-old company's sale would come after it
    massively streamlined last year before entering and emerging from
    "We could probably reach some kind of letter of intent in two to three
    weeks and close it in 60 days," iDefense President and CEO Brian Kelly
    said. "Everything is fast tracked."
    Kelly said iDefense is in discussions with six serious bidders, whom
    he declined to identify. Four of the possible buyers are locally based
    and all are interested in the online security sector. He is looking
    for an offer of $8 million to $10 million. The company provides its
    customers warnings against threats from hackers or other IT problems.
    Kelly joined iDefense in January 2001, about when it started to run
    into trouble from ambitious growth plans, he said. Kelly culled the
    company, cutting its workforce from 60 to 25. He also closed its
    forensics, certification and consulting lines of business to focus on
    the company's "core" intelligence offering.
    But by the following summer, iDefense still was dragging debt of $9
    million to $10 million, Kelly said. The company filed for voluntary
    Chapter 11 bankruptcy reorganization in Alexandria last August, also
    listing assets of $1 million to $10 million.
    IDefense restructured its debt by converting its outstanding warrants
    into private stock. The conversions came in two rounds, where either
    four or six warrants were swapped for one share, Kelly said. IDefense
    emerged from bankruptcy two months later in October with its remaining
    25 employees and 37 customers, he said.
    Now, Kelly sees a wave of acquisitions about to hit the security
    market and he thinks the increased interest can bring financial
    investment needed to rebuild iDefense. "This is going to be the year
    of the roll-up in the security sector. We have to position ourselves
    now to really play a piece in that."
    IDefense started in May 1998 as Infrastructure Forum but changed its
    name to Infrastructure Defense - doing business as iDefense - in July
    1998. It has landed roughly $15 million in funding total from friends,
    family, USWeb/CKS and e-Capital Investments plc. E-Capital provided at
    least $200,000 to get iDefense through bankruptcy and will keep
    funding the company through acquisition, Kelly said.
    The local e-security sector has experienced several acquisitions
    lately. Centreville data-security firm Para-Protect Services Inc. said
    it planned to sell its customer contracts to competitor Riptech Inc.  
    of Alexandria, a move that all but closes Para-Protect. And TruSecure
    Corp. of Herndon, a provider of information security services to
    government and commercial customers, acquired Three Pillars Inc., a
    Norcross, Ga., provider of security outsourcing, monitoring and
    intelligence services.
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