Mick Stroud's Big Island Brewing Ltd has shelved plans for a $10 million public share offer in favour of a $15 million cash injection from a group of WA-based private investors.
Mick Stroud's Big Island Brewing Ltd has shelved plans for a $10 million public share offer in favour of a $15 million cash injection from a group of WA-based private investors.
Mr Stroud, a wine merchant and chairman of wireless technology group Wavenet International Ltd, launched Big Island's prospectus in April to raise $10 million from the issue of 40 cent shares that valued the brewing newcomer at $20 million.
Big Island, which is yet to brew a beer, extended its initial public offer by a further three months last month.
But today Big Island said more attractive funding models had emerged and it would no longer proceed with a stockmarket float.
Big Island managing director Shane O'Hart conceded that investors had been wary about the float because it had not yet established itself in the market.
Mr O'Hart said launching an IPO without a proven track record had been "a weakness in the strategy" and while Big Island had developed a brand it had not delivered a product, which many investors had wanted to see.
"Conceptually there is a business model but we understand having a market presence or contracts in place is important," he said.
But Mr O'Hart said the brewer had overcome those initial investor issues and there was strong interest in the prospectus but the business had decided there were more attractive funding options in the market.
"From a strategic point of view we decided private equity was a better option," Mr O'Hart told WA Business News.
Mr O'Hart said the business had secured $15 million in private equity from a mix of individuals and companies.
He would not reveal the names of the investors but said they would collectively replace Mr Stroud as the company's biggest shareholder.
Under the IPO Mr Stroud's stake would have been 51 per cent if it received a full subscription.
The brewer would also have been locked in to paying Mr Stroud $1 million a year to lease the land and equipment in Canning Vale however under the private equity deal the brewery will own the assets.
Mr O'Hart said proceeds from the equity raising would also be used for marketing to help build awareness of Big Island's brands and "to achieve a significant presence in the premium beer segment."
"We are very excited about this development," he said.
He said the business would "commence owning all the assets, be debt free and have a strong balance sheet".
Mr O'Hart did not rule out a float of its business sometime in the future.
"Who knows what will happen in two years after we are established," Mr O'Hart said.
Big Island has bought a German brewhouse and bottling facility that is capable of producing 14 million litres of beer per annum, making it WA's biggest brewer.
The brewer had also anticipated to release its first beers at the end of the year but has pushed back the time-frame until early next year.
Mr O'Hart, a former senior executive of Coles Group Ltd's liquor division, said the delay would not impact the brewer's revenue forecasts.
