E-Store MD resigns prior to court hearings
- 22 May, 2002 09:29
Steve Spilly, managing director and one of the founders of online retailer E-Store, has resigned, ending a bitter battle for control of the company.
As reported previously (ARN, May 1, 2002), 14 matters were before the Supreme Court of Australia to determine the equity status of a US-based investment group, World Callnet Inc (WCI).
The legal proceedings were scheduled to begin this week but the existing shareholders of the company approached WCI to settle out of court under the likelihood of a six-to-nine month distraction to business. According to Spilly, there was "no way the company would be able to go forward under such duress".
Spilly said such stagnation was not in synch with his personal goals, which meant that tendering his resignation was a relatively easy decision to make. He refused to concede that he had lost the "battle" for control of the company.
"We had a very strong case but in the end it would have been a very empty victory," Spilly said. "The legal process would have destroyed the company and that would not have served any purpose. Continuing under the current structure was unworkable. The other directors weren't prepared to exit and it was pretty clear we couldn't work together, so to resign as a director was the only real choice."
The "other directors", appointed under a Supreme Court ruling, were WCI representatives Gerard Farley and David Anstey.
According to Farley, "the whole matter was settled out of court" in relation to equity, and WCI now has 99 per cent control of the company. A single 1 per cent shareholder has not signed over its share but only because it was not available to do so. Full control will allow the E-Store management to push on with its shift from "a cyber-only strategy into a bricks-and-clicks strategy", he said.
The change of direction has begun with the relocation of the business to North Sydney premises formerly owned by the now-defunct Laptop Land (NSW). E-Store's new premises will become a showcase for the Web site and the products it sells as well as the company's administration centre. New signage is being put in place and the site will be open as the first bricks-and-mortar E-Store "before the end of the week", Farley said.
"This [the legal proceeding] has been a fairly full distraction that put us behind on our plans by about a month," Farley said. "But sales continue to be stronger than ever. If the first two weeks of this month are any indication, we will again have a record month in May.
"Once the store is open we are extremely confident that sales will be boosted even further. Without distractions, we can now start to implement some of the marketing strategies we have planned to drive the business going forward."
Farley quoted unidentified US market research that indicated there is a "77 per cent improvement in confidence" from buyers where there is a physical store to visit. "North Sydney is a great place to kick-start our bricks-and-clicks strategy."
Farley insisted Spilly was not pushed out by WCI. "He resigned," he said. "We are moving forward and making sure we can totally account for what we believe is a business."
A new managing director has not yet been appointed but two candidates are under consideration from directors, Farley saidAfter being founded in 1999, E-Store became the last surviving pure-play e-tailer in Australia before being placed in voluntary administration in November last year. The administrators called for expressions of interest to buy the business, which is when WCI arrived on the scene.
Earlier this month a brawl erupted over control of the company when the relationship between WCI and Spilly soured. This led to Supreme Court action from both sides, which was settled out of court on the day hearings were due to begin.