McCashin's Brewery won't take a cornerstone stake in food and beverage investor Veritas Investments, backing out of an option to buy a near-20 per cent stake at a hefty premium.
In January, 660 Main Road Stoke - which trades as McCashin's - obtained a call option to buy 8.6 million Veritas shares from Mad Butcher owner Michael Morton at 20 cents apiece. The options expired at the close of business on March 29, but notes to the stock exchange today show the option was terminated.
The $1.7 million purchase price would have been a premium to the current trading price of 13 cents, or $1.1m. However Veritas shares aren't widely traded, with a 90-day daily average volume of 51,278 out of the 43.3 million shares on issue.
The transaction included a non-refundable deposit of $50,000.
Auckland-based Veritas is focusing on its bars and hospitality offerings, having been hard hit over the past two years by disastrous forays into the Mad Butcher and Nosh grocery businesses. Veritas paid Morton $40m for the meat retailer in 2013 and sold the franchise back to him for just $8m last year.
It had faced pressure from its former banker, ANZ, for repayment of $27m in loans before resetting as a smaller, hospitality-focused company.
In 2014 it acquired the Better Bar Company, which describes itself as the country's leading Irish and gastro pub operator, with eight sites in Auckland. Last month, Better Bar Co completed the $2.7m purchase of the Citizen Park pub in Kingsland.
Last week, Veritas appointed Duncan Makeig as a new director, who will chair the board, and said it plans to rebrand later this year as Good Spirits Hospitality.
Veritas also entered into sales agreements of its Doolan Brothers Newmarket and Doolan Brothers Lynfield sites to separate operators, and expects to generate $710,000 of cash before transaction costs, which it will plough back into growing the gastro pub portfolio.
Nelson-based McCashin's was at the forefront of New Zealand's fledgling craft beer industry in the 1980s. Its Mac's beer business was sold to Lion in 1999, but the family started afresh and now make Stoke beer and Rochdale cider. Director Paul Le Gros wasn't immediately available for comment.