New Investors to Rescue Letsbuyit.com
The company has been in moratorium and under control of two administrators appointed by a Dutch court since the turn of the year.
They were ready to pull the plug on Jan. 25 when 4 million euros were found.
Martijm Nijstad, an attorney who speaks to the media for the administrators, confirmed news reports last week that the additional money had been found but refused to identify the investors.
"The deal still has to be formalized," he said, "and the final agreement signed, but they have found investors who are willing to put up the money."
As a next step management will ask the Dutch court to lift the moratorium, a step short of bankruptcy under Dutch law, and the court is expected to do so.
Nijstad said the company and its lawyers must still draft a legal request asking the court to lift the moratorium. That should be ready this week and the court is likely to act within days, he said.
Once it does, Letsbuyit.com is free to resume operations. Its Web sites in 15 countries currently do not accept orders. Indeed, most of them will be shut down as part of corporate restructuring. It has already let go 200 of its 350-person workforce.
Kim Schmitz, a flamboyant German venture capitalist, will not put up the money as originally reported. Media reports said letsbuyit.com management found the German wheeler dealer too distasteful to do business with. It turned out that Schmitz had legal problems in Germany.
Letsbuyit.com's group buying concept, known as power shopping , allows buyers to purchase goods more cheaply because of larger group orders. The concept attracted more than 1 million European customers.
The problem, analysts said, was overspending on marketing, especially during the Christmas rush. The high burn rate depleted capital and sent shares on Germany's new market into a tailspin.
While the company is not out of trouble, Nijstad sounded far more upbeat about future prospects than he had only a week ago when he was sure of only the 4 million euro infusion of cash.