BioVittoria, licking wounds after failed IPO, has support of bank, Thorrold says

Wednesday 30th December 2009

BioVittoria, which became New Zealand’s third initial public offering in two months to falter, has the support of its banks while in breach of a lending covenant, said chief executive David Thorrold.

The start-up natural sweetener company’s $20 million IPO didn’t make its minimum requirement of $8 million as mums and dads stayed away. According to BioVittoria’s prospectus for the failed IPO, the company was in breach of its debt-to-equity covenant in the year ended March 31 and continues to be in relation to its loan facility with ANZ National Bank. That means it is relying on its bank to continue operating.

“The bank is supportive,” Thorrold told BusinessWire. “That’s not problematic for us. The nature of the debt is such that it would continue,” he said, declining to be specific.

Private equity from overseas will fill most of its capital raising now, Thorrold said.

BioVittoria boasts directors including chairman Robert Stringer of U.S. venture capital firm Sherbrooke Capital, Stuart McKenzie of New Zealand’s Endeavour Capital and Bridget Liddell, wife of General Motors' newly named CFO Chris Liddell, from New York-based Fahrenheit Capital.

The company’s advisory board includes former Coca-Cola Co. R&D executive Danny Strickland and former PepsiCo Inc. executive Christopher Sinclair.

Thorrold said there was sufficient support from institutional investors. “It was the retail part that was where the shortfall was. In the end, retail investors are just not keen on equity.”

The same lack of support was evident in Synlait’s decision to put off its share sale and even retailer Kathmandu garnered more support across the Tasman, he said.

The IPO was probably priced about right, according to Thorrold, though that is hard to discern in a market with so few new offerings. Brokers said BioVittoria’s lack of earnings track record put some investors off.

“BioVittoria is really for the risk-tolerant investor,” said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. “Unfortunately risk appetite has dwindled considerably for the New Zealand investor over the last 18 months.”

The prospectus said that if lenders decided to withdraw their ongoing support, “then the group may not be able to continue to operate as it would not be able to pay creditors as they fall due.”

DNZ Property Fund is the other company that put off its IPO, dealing a triple blow to the NZX Ltd. in terms of new listings.

“This is disappointing but it’s certainly not the end of things,” said Garth Smith, a Guangxi, China-based director of the company. “Obviously there was a question of timing, with the end of the year – and lots of other factors.”

BioVittoria had wanted the funds to buy fruit to ramp up production in anticipation of Food & Drug Administration approval in the U.S., which is hoped for next month, Smith said. “We have a big outlay to buy fruit every year,” he said.

The company wants to commercialise a zero-calorie sweetener called PureLo, which is extracted from luo han fruit grown in China’s Guanxi province. It claims the white powder produced is 200 times sweeter than sugar and sells for about US$450 a kilogram.

Businesswire.co.nz

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