The troubled co-operative purchasing website announced on Wednesday night that administrators had withdrawn requests for bankruptcy after receiving ‘receipts showing written commitments, to their satisfaction, that the requested funds of Euros 4m will be made available.’
LetsBuyIt said the money had been raised from existing investors and German venture capitalist Kimvestor, which has said it may invest Euros 50m in the company, by the end of February.
‘We believe in the business concept and success of LetsBuyIt.com,’ said Kim Schmitz, CEO of Kimvestor.
On 29 December, the company’s Dutch operation was granted protection from creditors until 14 March, but last week this date was effectively brought forward to 7 February after the court ruled that LetsBuyIt must raise Euros 28m in two weeks from today.
Promises of Euros 50m from Kimvestor would appear to have bought LetsBuyIt, and the 14 European websites it runs, more time to formulate a recovery businesss plan.
John Palmer, CEO of LetsBuyIt, said preliminary 2000 revenues amounted to Euros 38.5m, up 1600%. He added that the company had reduced its marketing expenditures by 60% compared to the first half of the year.
‘We are clearly in a tough phase of our business but based on last year’s strong results and ongoing investor support, the new management is confident in being able to resume operations with a refreshed and strengthened company and a cost structure that is relevant to the current market environment,’ he said.
Palmer added the firm was also talking to other possible investors as well as Kimvestor.
Although the news gives customers further hope that their outstanding orders may be fulfilled, they could still not contact the company by phone at 10am this morning.
The market, however, reacted favourably to the news, with LetsBuyIt shares climbing 125% to Euros 0.54 in heavy trading this morning.
Analysts said the deal bought the firm more time, but did not change LetsBuyIt’s fundamental problem of generating a loss on every sale it makes.
Its IPO in July last year raised Euros 61.65m, only half as much as it had planned for, due to a fall in tech shares. Earlier this month, the company reported having only Euros 17.92m in cash remaining in the bank.
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