StoreFund offer collapses

By LIAM DANN

Storefund's $30 million share offer and listing plans have collapsed after ASB Bank backed out of the deal at the eleventh hour.

By walking away from the float - which it underwrote to $20 million - ASB becomes the majority owner of the BBQ Factory.

Statements yesterday from ASB and the StoreFund directors claimed the decision to cancel the float and return money to investors was mutual.

But speculation this week centred on tense legal negotiations between the two parties.

Some market commentators say it is likely North Head Management - the Wayne Walden-led group that was to manage StoreFund's assets - will have walked away with a substantial financial settlement.

"A commercial agreement was reached between ourselves, North Head and StoreFund," said ASB head of institutional banking Peter Hall.

"The cost is - in the greater scheme of things - negligible."

There were costs relating to things such as printing the prospectus, he said.

Hall was asked if there was a specific payment to North Head for the loss of management fees.

"That I can't comment on," he said.

According to the prospectus, North Head - a group including Walden, Jump Capital's Leigh Davis and former Farmers finance chief Garry Bluett - was due fees of more than $400,000 a year for managing StoreFund.

A spokesman for North Head also declined to comment on the issue of a settlement.

The StoreFund offer was a dismal failure.

Hall said the minimum subscription level of 25 million shares - at $1 each - had not been reached.

The inability to sell an additional five million shares - over and above the underwriting level - raises serious questions about ASB's decision to take on the deal in the first place.

Hall said he was disappointed.

The initial pitch met with a very good level of support from the broking community, he said.

The bank was now in the process of investigating what went wrong with the level of subscriptions.

One broker told the Weekend Herald that his institution raised concerns about the high fee structure with ASB at an early stage.

Herald columnist Jenny Ruth also highlighted concerns about the fee structure last month.

Asked what had changed about the deal that made it undesirable for ASB, Hall said the problem was with the level of subscriptions.

"We were concerned about future liquidity and we were concerned as to the potential for a share overhang on the market from the underwriters," he said.

The directors took the decision "in the interests of shareholders".

One analyst said the decision was a bad look for the bank.

"Regardless of the details of the law, it is not in the spirit of an IPO," he said.

"What is the point of getting someone to underwrite a deal if they can back out so easily?"

ASB is understood to now own about 75 per cent of the BBQ Factory. Founder Roger Richwhite is said to have retained the remainder.

Richwhite was to have been paid five million shares in Storefund.

Hall said the bank was comfortable holding the stake as private equity.