LARKSPUR, Calif. -- LRG Capital Group, LLC, a global merchant bank and general partner of the BayStar Capital III Investment Fund, L.P., announced today that BayStar Capital III has entered into an agreement to provide up to $16 million in subordinated, convertible debt financing to GlassHouse Technologies, Inc. (GlassHouse), a Massachusetts based IT infrastructure consulting company. Velocity Capital Group and Leader Ventures are co-investors in the transaction. The structure is a subordinated, convertible debenture, designed to provide equity-like capital while minimizing incremental dilution.
An initial advance of $6 million was funded immediately and the proceeds were used to fund GlassHouses acquisition of RapidApp, a Chicago-based server virtualization consulting company. RapidApp, founded in 1999, assists in the design and deployment of some of the largest computing infrastructures in the United States, including server virtualization and projects, and the virtual infrastructure that supports them.
The growth in the server virtualization business and the success of companies such as VMware (NYSE:VMW) clearly validates GlassHouses strategy to acquire an established player such as RapidApp. This financing was a creative solution for a blue-chip company such as GlassHouse to strategically expand its business without issuing additional equity, said Lawrence Larry Goldfarb, CEO of LRG Capital Group and Portfolio Manager of BayStar Capital III.
GlassHouse Technologies Inc.