gold snares macquarie

From Finreview 12.07.08

St Barbara's gold production might be meeting forecasts, but that won't ease Macquarie Group's pain as the underwriter to St Barbara's $120 million raising that has come up decidedly short.
Macquarie has been left holding 123.6 million shares after St Barbara's shares remained stubbornly below the 40c issue price since mid-June and retail investors only subscribed for less than 2 per cent (16.8 million) of the 130 million shares that were on offer.
Macquarie will take the shares at the 40c issue price, although the shares are trading at closer to 30c each, representing an immediate loss of about $12 million.
St Barbara had already raised $63.4 million from the institutional component of the deal.
That's a sizable hit for a role that only delivers the group about $3 million in fees (under the terms of the underwriting agreement, St Barbara will pay Macquarie fees of 2.75 per cent of the gross proceeds of the offer).
The under-subscriptions also leave an overhang on the $350 million group's stock, with Macquarie unlikely to continue holding the stock indefinitely.