FlyingPig in market for a rich friend

By KARYN SCHERER

Internet retailer FlyingPig is looking for a new investor to help steer the company through its next phase.

The move comes as key investor Eric Watson has signalled a more cautious approach to the privately owned company, due to global nervousness over e-tailing.

However, chairman Stefan Preston has rubbished Australian reports that the company is in financial difficulty and seeking a buyer.

"It's true that we are looking for another strategic shareholder, and maybe that has somehow sparked rumours."

It has been a turbulent few weeks for FlyingPig, launched with much fanfare at the end of last year. A planned merger with e-tailer TheSpot collapsed last month after the Australian company struck severe financial problems.

TheSpot has since been bought out by retailer David Jones, which intends to use its technology to jump-start its own internet strategy.

As a result, around 20 staff employed by TheSpot lost their jobs, and FlyingPig made around half its own staff redundant two weeks ago.

It attributed some of the job losses to new technology, and others to a decision by its backers to "dramatically downscale" the amount of money they were prepared to put in.

The fledgling e-tailer is believed to have chewed through more than $4 million since its launch.

Companies Office records show the Blue Star Group, of which Mr Watson is chairman, came to FlyingPig's aid in February, coughing up an extra $2.5 million in capital in return for shares.

The Pacific Retail Group, which owns 39 per cent of FlyingPig, revealed last month that it had lost just over $1 million on the venture to the end of March.

Mr Preston has played down the losses, describing them as normal teething problems. The extra money that has been poured into the business has come at a price - his stake has been diluted to the point where he is no longer a major shareholder.

The company's board includes Whitcoulls head Mike Ferrand, Advantage Group chairman Evan Christian and Pacific Retail director Nick Gordon, as well as former Prestige Marketing executive Paul Meier.

The website is believed to sell 350 to 400 books daily, largely due to its deal to handle Whitcoulls' internet orders.

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