Critical Path Announces Significant Progress On Financial Restructuring Plan With Debt Buyback; Company's Debt Buyback Leads To Net Gain of More Than $90 Million.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 21, 2001

Critical Path, Inc. (Nasdaq:CPTH), a global leader in communication technology and complete messaging solutions for wireless and wireline carriers, service providers and corporations, today announced it has significantly improved the company's balance sheet over the last few months by buying back its outstanding convertible subordinated notes at a net gain of more than $90 million.

As part of the company's plan to restructure its outstanding debt, Critical Path has successfully repurchased nearly $129 million of face value of its outstanding convertible subordinated notes at an average price of less than 25 cents per dollar for a net gain (and increased equity) of approximately $90 million. As announced in its second quarter financial results press release on August 2, 2001, $5 million of face value of debt was repurchased in the second quarter and approximately $40 million of face value of debt during July. Subsequent to August 2, 2001 Critical Path continued to execute on the company's debt restructuring plan by repurchasing approximately $83 million of face value of outstanding debt at a significant net gain.

In addition, the company announced that, as anticipated during the second quarter earnings call, it has received formal notification from Nasdaq that based on its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001, Critical Path did not meet both the minimum net tangible asset and minimum equity requirements for continued listing on the Nasdaq National Market. However, on a pro forma basis, if the additional debt repurchases completed so far during the third quarter had been completed as of June 30, 2001, the company's net worth would have been approximately $35 million, which is greater than the Nasdaq National Market requirement. Critical Path will present to Nasdaq on or before September 4, 2001 the success of its strategy for short-term compliance to date as well as its plan for long-term compliance.

"A debt reduction this significant is a major milestone for Critical Path as we continue to successfully restructure the company's balance sheet," said William E. McGlashan, Jr., President and COO of Critical Path. "When combined with the solid Q2 progress we reported on our restructuring plan, we are optimistic about the company's ability to execute on our path to profitability."

The company also expects to soon receive notification regarding the minimum bid requirement for continued listing on the Nasdaq National Market, as the company's bid price has been under $1 for twenty-eight consecutive trading days. As part of its definitive plan for long-term compliance, Critical Path will take all necessary steps to meet this listing requirement and will present its plans to the Nasdaq National Market when required.

About Critical Path, Inc.

Critical Path Inc. (Nasdaq: CPTH) is a global leader in communication technology and complete messaging solutions for wireless and wireline carriers, service providers and corporations through its integrated platform of messaging applications and directory infrastructure. Critical Path is headquartered in San Francisco, with offices throughout North America, Europe, Asia and Latin America. More information on Critical Path can be found at http://www.cp.net./.

Safe Harbor 

This press release contains forward-looking statements, including the Company's statements regarding the restructuring of the debt and equity position of Critical Path, plans related to the sale of certain product lines, plans to strategically exit certain products and services, plans to reduce costs through a reduction of personnel and a consolidation of office space, our anticipated charges and cost savings as a result of these plans and our belief as to our ability to successfully emerge from the debt and operational restructuring. The words "anticipate," "expect," "intend," "plan," "believe," "seek," and "estimate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to the, response of financial markets and investors to our restructuring plans, difficulties of forecasting future results due to our limited operating history, evolving business strategy and the emerging nature of the market for our products and services, pending litigation and SEC investigation, turnover of senior management, board of directors members and other key personnel, difficulties in implementing our strategic plan to exit certain products and services offerings, difficulties of integrating acquired businesses, failure to expand our sales and marketing activities, potential difficulties associated with strategic relationships, investments and uncollected bills, risks associated with continued compliance with NASDAQ National Market listing requirements, risks associated with our international operations, foreign currency fluctuations, unplanned system interruptions and capacity constraints, software defects, and those discussed elsewhere in this announcement. These and other risks and uncertainties are described in more detail in the Critical Path's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as amended, and the quarterly reports on Form 10-Q for the quarters ended June 30, 2001 and March 30, 2001,respectively, both as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov).

Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc. All other trademarks are the property of their holders.