Buy.com Pulled Back From Brink
Buy.com said the credit card processing company, which it did not name, agreed to an automatic extension of its contract through August 2002 and will again process Visa and MasterCard transactions.
"I am pleased to report that it's business as usual," Robert Price, president of buy.com, said in a statement.
Price told The Associated Press that he was certain the reason the credit card processor relented on its threat to cancel its contract was the financial support buy.com founder Scott Blum is giving the company.
Earlier this month, Blum's firm SB Acquisition Inc. agreed to merge with buy.com and immediately extend the retailer interim financing of $9 million, in the form of a $4 million line of credit with a provision for an additional $5 million standby letter of credit. The merger is expected to be completed by the end of November, pending shareholder approval.
"I am happy to provide the necessary financial backing for the company's continuing operations," Blum said in a statement.
Buy.com said the unidentified credit card processor notified it June 22 that it would stop processing its credit card transactions the next day. The processor agreed to extend its contract to Sept. 1 on the condition that buy.com pay an additional 1 percent of each transaction and allow the processor to withhold 5 percent of daily receipts as security.
Price told AP that the processor agreed to withdraw its additional processing fee and security deposit.
In his statement, Blum made an oblique reference to financing in addition to SB Acquisition's $9 million of interim financing.
No one at buy.com was available for comment. Blum could not be reached.