GEM Group, a New York-based private equity firm, has pledged E25m to Dutch-registered Letsbuyit.com, the troubled online retailer.
Shares rose a third to E0.52 on the news, which came as the company announced its results for 2000. The shares have lost 90 per cent of their value since their peak of E5.55 last July.
GEM’s investment is structured as an “equity credit line, from which Letsbuyit.com can draw down at any time over the next two years, entirely at its own discretion”.
Letsbuyit has also secured a further E50m from Shmulik Stein International Investments. Shmulik Stein said it would invest E3.8m in a first tranche and a further E26.2m as and when Letsbuyit.com achieved certain milestones.
Shmulik has so far paid out E948,995. However, the two companies are in discussions about payment of the rest of the first tranche and are renegotiating their agreement.
Letsbuyit.com said revenues grew to E38.2m in 2000 from E2.2m in 1999.
But the sales were overshadowed by the company’s net loss of E141.7m. It put the loss down to the cost of brand-building and repeated its aim of reaching profitability by the end of 2002.
Letsbuyit.com operates a co-buying model that claims to be able to reduce the prices when customers that want to buy the same product come together to buy in a group.