Paul Henare has delivered a Breakers bombshell, stepping down from the club in a move which has surprised new owner Matt Walsh.

Henare is out as New Zealand Breakers head coach, having rejected a contract extension from the franchise to walk away after two seasons in charge, and 15 years at the club as player and coach.

The Breakers missed the playoffs in his first year as head coach, but performed strongly to make the semifinals this year, before losing to Melbourne United. In his reigns with the Breakers, Tall Blacks and various NBL sides, Henare has proven that he is the best coach in the country, which makes his departure a sizeable blow, and a definite shock.

To walk away from a club where his jersey hangs in the rafters was so unexpected that it even caught Walsh, who took over as majority owner last month, by surprise.

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"As a new ownership group coming in, I wanted to get to know Paul. Unfortunately we never got that opportunity," Walsh told NZME.

"We've been working through things and seeing if we can find some common ground in terms of years – I don't think money was ever going to be an issue. We were a little caught off guard."

Henare previously turned down a contract extension earlier in the season, but Walsh was still confident of getting him on board, until today.

"We haven't been in talks with anyone else because up until now we've been operating with the belief that Paulie would be our guy."

Henare's contract runs out at the end of this month, and the Herald understands that he is already lining up a new role at club level.

One destination could be the Cairns Taipans, who parted ways with long-time coach Aaron Fearne last month, though that would be an interesting lateral move for a coach of Henare's reputation.

The Breakers now turn their sights to a significant offseason ahead, with the coaching search to start shortly.

"We don't have anyone in mind – I'm sure we'll have no shortage of interest. We're not going to limit ourselves just to guys who have coached here - we'll do a broad search," asserts Walsh.

In the past, the Breakers have promoted from within, with Walsh noting that current assistant coaches Mike Fitchett and Judd Flavell are both likely to stick with the club. Elsewhere, former Breaker and current Wellington Saints coach Kevin Braswell would be the leading local candidate for the gig.

The new coach could have a revamped roster for the 2018/2019 Australian NBL campaign, with only Alex Pledger currently under contract for next season.

Walsh indicated that the club will "bring back a lot of guys from last year", and expects announcements to come shortly.

However, it's hard to believe any coming announcement will be as surprising as Henare's departure.