6/28/01 - (WhatTheyThink.com) Sources confirm that PaperExchange’s technology has been sold to HIT International Trading AG located in Europe. HIT is one of Europe’s largest paper trading companies. Sources say that HIT will use PaperExchange’s technology to help power HIT’s information technology partner - PaperSpace. WhatTheyThink.com originally reported in May that PaperExchange.com had reached a deal with eSpeed. Company executives at PaperExchange and sources at eSpeed confirmed that the deal was nearly complete. eSpeed expected to announce in early June, however, discussions broke down at the last minute and the deal was terminated. Sources say “HIT got a sweet deal and may not even announce the transaction.” We were unable to confirm details of the transaction, however PaperExchange’s web site confirms the deal. Sources say preparing for the announcement with eSpeed, PaperExchange shut down it’s European office which had 18 employees in May. PaperExchange reportedly searched for several companies who could take advantage of their trading technology, but was most serious with eSpeed. eSpeed is an ASP offering electronic marketplaces in 45 financial and nonfinancial instruments. PaperExchange enabled buyers and sellers to negotiate pricing and directly transact with one another through its marketplace. The Boston-based company filed to raise $115 million in an IPO in March of 2000 only to pull the offering in September 2000. The company sited economic reasons for the move. PaperExchange, formed in April 1998, was a joint venture of the Internet Capital Group and the Kraft Group, which owned a 24.6 percent and 55.7 percent stake in the company, respectively in September. In February, the once high flying Internet Capital Group reported a loss of $560 million in the fourth quarter. The company stated in it’s SEC filings that PaperExchange had incurred substantial losses since its inception and had an accumulated deficit of $47.4 million as of December 31, 2000. After ICG’s acquisition, the plans to develop relationships with ForestExpress and exploit relationships with certain strategic partners deteriorated and their CEO resigned. According to their annual report, “It was then determined that revenue estimates for the remainder of 2000 would be significantly below plan estimates and the company's cash burn rate continued to increase. As a result of these factors we performed an evaluation of the carrying amount of our investment in PaperExchange.com (and determined) that it was necessary to record an impairment charge as of December 31, 2000. The impairment charge of $128.2 million was based on the estimated current fair value of PaperExchange.com, which was determined by estimating our future discounted cash flows related to PaperExchange.com including the estimated proceeds upon disposition.”