Deal will settle FlyingPig's fate

By KARYN SCHERER

The future of New Zealand's highest profile e-tailer, FlyingPig, is likely to be clarified this week with a deal that could bring a new investor into the company.

New Zealand's answer to Amazon.com is also believed to be considering a proposal in which listed appliance retailer Pacific Retail could increase its stake in the venture.

The fledgling e-tailer, which launched just under a year ago, has been on the hunt for a new investor for several months after key backer Eric Watson indicated he was no longer willing to pour millions of dollars into the company.

It is understood the proposed deal will enable some of the original backers to quit their investments.

FlyingPig, set up by former Whitcoulls head Stefan Preston and his business partner, Adam Keller, is now largely controlled by the Blue Star Group.

The group stumped up an extra $2.5 million in capital in February in return for shares.

Mr Watson was unable to be reached for comment yesterday.

He has already hinted he would like to see Advantage Group quit its stake, and Pacific Retail boost its holding.

It is understood, though, that neither Pacific Retail nor Advantage Group have yet approved the deal.

Pacific Retail, which owns the Noel Leeming, Bond & Bond and Computer City chains, owns 39 per cent of the company.

Mr Preston, who is also Pacific Retail's managing director, said last night that he hoped to finalise a deal soon, but would not elaborate.

Pacific Retail revealed in June it had lost just over $1 million on the venture to the end of March.

The company has since moved to allay shareholder concerns about the investment by emphasising it has taken steps to reduce its losses.

In June, Mr Preston laid off half FlyingPig's staff and handed the day-to-day running of the operation over to its financial chief, Mark Battles.

Mr Battles has since insisted the company is likely to break even within the next year.

Meanwhile, FlyingPig's Australian equivalent, Dstore, has still not finalised its plans to move into the New Zealand market.

The rival e-tailer originally predicted it would expand across the Tasman in May this year.

Chief executive David Gold said yesterday that the company was still eyeing New Zealand, but was struggling to sort out delivery issues.

"There's one thing that may come off that means we will be in the market prior to Christmas. If that doesn't happen, it will be in the new year."

The moves come amid continuing global uncertainty over the future of internet retailing.

While several high-profile internet retailers have collapsed in recent months, some are continuing to survive by slashing costs and scaling back their ambitious plans.

All this as the Government is poised to announce its e-commerce strategy at a two-day summit in Auckland, starting tomorrow.