Dot-com secures $95m funding

Somebody's keeping the faith...

Secure email firm Critical Path has defied the tech gloom to secure a massive $95m in funding from VCs. The money, dependent on the firm settling shareholder lawsuits hanging over it since February, will be used to pay off debt and expand abroad. The firm has been granted the money from a group of venture capitalists led by General Atlantic Partners and including Cheung Kong, Hutchison Whampoa and Vectis Group. Critical Path is trying to paint the funding and tentative settlement as a turning point in the struggling company's fortunes. Despite being a leader in the field of secure email, Critical Path looked to be on its last legs this summer when it faced de-listing from the Nasdaq exchange after its share price fell from $113 at the height of the tech boom to just 26 cents at the start of September. However, following the funding announcement, shares in the company jumped by 88 per cent to close at $2.12 on Friday. The funding will reduce the firm's debt mountain to $37m. The news follows the San Francisco-based company saying on Thursday that it had reached a tentative agreement to pay shareholders $17.5m in cash and buy back more shares to end the lawsuit. It admitted no liability, and said the pay-out would be covered by its insurance. The announcement also shows Critical Path's continued strategy to re-purchase stock at current prices which it sold at the height of the boom. Steve Barrie, research analyst for Bloor Research, said: "The investment is making Critical Path look financially stronger without it having to make any real effort. This strategy is a very good one as long as there is a vision of a profit-making business. Somewhere along the line the company has to turn its paper transactions into real money."