CHAIRMAN Michael Smurfit stood to drawn down up to ?17m from the proceeds of a Jefferson Smurfit Group junk bond offering before the fundraising was pulled late week.

JSG pulled the ?250m bond deal as the interest rate coupon on the bonds being demanded by investors was deemed "unattractive" to the company.

The payment to Smurfit would have represented roughly one third of the ?54m he re-invested in JSG when the packaging giant was taken off the stock market in 2002. Smurfit received a total of ?168m in cash and ?73m worth of shares in US affiliate Smurfit Stone as part of the leverage buy-out.

Smurfit rolled over his 7% shareholding in the paper and packaging group, reinvesting the ?54m in the private company. US investment house Madison Dearborn Partners led the buy-out, Merrill Lynch and a former Deutsche Bank venture capital wing, now privately owned, are also shareholders in the company.

Jefferson Smurfit Group, the world's biggest maker of cardboard boxes, called off the sale of ?250m of junk bonds after investors demanded more yield than the company was prepared to pay. The proceeds were to be shared out amongst the equity investors, paying down some 30-40% of the capital invested in the buy-out.

"People were looking for an increased yield which made the deal less attractive, " Mark Kenny, a spokesman for Jefferson Smurfit said. "There was a recent and significant deterioration in the bond markets." The company is believed to have sought a 'yield' or interest rate of 10% on the bonds, but the market for these securities rose sharply over the marketing period to 12%.

Earlier this year, Michael Smurfit said that he was preparing to lead the company back to the stock market.

He netted ?21.3m for the sale of almost two million shares in the troubled USbased Smurfit Stone Container Corporation (SSCC) over a six-week period in September and October.

The company had $3.7bn of net debt as of 30 September 2003, a year after Chicago-based Madison Dearborn bought it for $3.3bn. The bond offering pulled last week would have brought the group debt to over $4bn.