Data center provider NaviSite announced on Monday that it will sell one of its managed application services businesses to Velocity, an application service provider, for $56 million in cash. As part of the transaction, Velocity will take over NaviSite's lease of a data center in Minneapolis, Minn., which hosts and supports the applications involved.

NaviSite CEO Arthur Becker said in a statement that the deal, effective immediately, would enable the company to focus on a narrower portfolio of offerings. The company will use proceeds from the sale to repay debt.

According to its latest earnings statement, NaviSite revenues dropped eight percent in the first quarter of fiscal 2010, ended on Oct. 31, 2009, year-over-year. That quarter, the company reported a net loss of $3.3 million, the same amount it lost during the same quarter in the preceding year.

The deal encompasses NaviSite's division that serves Lawson and Kronos applications. Lawson provides applications for business process management, CRM and supply chain management, among others, and Kronos develops a suite of employee management applications.

"The sale of our Lawson/Kronos business is consistent with our strategy to focus on providing enterprise-class cloud computing for large organizations with highly complex environments," Becker said. "By divesting our Lawson/Kronos practice, we will be better able to focus on our core enterprise applications business and accelerate the progress of our NaviCloud suite of solutions.

"The proceeds from this divestiture will be used to reduce our debt and will provide us with more balance sheet flexibility in the future."

The Minneapolis data center supporting the Lawson and Kronos application offerings is an 11,250 square foot facility at 1200 South Washington Ave. Besides application management, NaviSite has been using the site to provide colocation, managed hosting and cloud-based services.

The provider operates 14 other data centers in the US and UK, majority of them in the US.