BLUEFLY PANS FOR GOLD, FINDS $3.5M IN CREDIT
NEW YORK — Internet off-pricer Bluefly Inc. has done it again. It’s just squeezed fresh funds from yet another unlikely source, asset-based lender Rosenthal & Rosenthal, which is providing the unprofitable dot-com with $3.5 million in immediate credit.
The financing is part of a total line of credit from Rosenthal & Rosenthal, slated to top out at $10 million at any one time, and is based on the value of Bluefly’s inventory, among other things. Bluefly, which went live at bluefly.com in September 1998, is set to announce this arrangement today, as well as the completion of its third round of financing from Soros Private Equity Partners, totaling $10 million, as reported in WWD Monday.
Given the shaky economy — and prospect of obtaining access to a larger amount of apparel headed for deep markdowns — Bluefly approached various factors about loans in February, said Jonathan Morris, executive vice president of the online off-pricer based here in the fashion district.
“The credit line from Rosenthal & Rosenthal means we will be able to negotiate better trade terms with our suppliers,” Morris noted. “This isn’t mostly working capital; we’ve got the Soros funds for that. It’s mostly to work out better deals.”
The deal makes Bluefly one of the first fashion dot-coms to secure an asset-based loan, which is ironic, in part, because struggling dot-coms are light on assets to begin with and even moreso in the case of an off-pricer, which often has trouble obtaining enough inventory to meet demand — a condition exacerbated in cyberspace.