Struggling Egghead.com Inc. secured US$20 million in financing from IBM Corp. today, but the online retailer was forced to use all of its assets as collateral for the financial lifeline.
John Labbett, Egghead.com's executive vice president and chief financial officer, said the credit line with IBM Global Financing will provide "sufficient funds to take us through to profitability" by the end of the year. He added that the company will continue to look for other financing options to maintain a "solid cash balance."
Egghead said it secured the loan from IBM Global Financing with its inventory, accounts receivable and other assets.
The announcement comes on the heels of a series of setbacks for the online retailer of technology products. Two days ago, Egghead.com laid off 77 employees or 12 percent of its workforce after reporting a fourth-quarter net revenue loss of $9.6 million. Sales in that quarter were down more than $61 million compared with the same quarter the year before.
Formerly a brick-and-mortar retail chain, Egghead shuttered 83 retail stores in the US three years ago and moved into the e-commerce realm. It was then bought by OnSale.com.
William Doscas, vice president of market and sales operations at IBM Global Financing, said the Egghead deal "adds to our broad commercial financing portfolio, which provides flexible financing for inventory, accounts receivable and acquisitions."