“I am pleased to have done what I could during this board to produce good results for shareholders,” Wylie said. “With a long personal experience in mergers and acquisitions, my view was that the deal for the sale of consumer finance, when it was initially agreed, was very good for Humm.”
As late as Tuesday evening, Christian Christian had defended the board’s actions under pressure from dissident director Abercrombie, whose opposition to the sale of Humm’s Consumer Finance Division (HCF) was revealed by first on Street Talk in May.
Since detailing Mr. Abercrombie’s objections to the agreement’s pamphlet on May 18, Humm’s majority shareholders had consistently urged shareholders to accept the $ 35 million offer and 150 million shares of Latitude shares. saying that market conditions in the buying sector now and payment afterwards had become bad.
The latest such statement was made on Thursday, a week before the June 23 vote, when Latitude shares closed at $ 1.40, valuing the deal at $ 245 million.
“The business environment is very tough for HCF, with intense competition, rising interest rates and a weakening of consumer sentiment. HCF has experienced a reduction in net accounts receivable, compression of net performance and expenses higher, ”Christian said, citing“ materially lower ”profits that fell 61 percent from the previous year.
“Without an improved scale, which will offer the Latitude transaction, the prospects for HCF will be even more difficult.”
But on Friday morning, after the initial count revealed that 78 percent of 50 percent of shareholders had voted against the deal, directors said they would end it on the basis that its value had fallen below of the $ 260 million in the lower range of the independent expert range. .
Morningstar analyst Shaun Ler questioned the company’s rapidly deteriorating outlook, as the independent expert had predicted conservable earnings of $ 25 million to $ 28 million. With a 61% drop in profits, its forecast for this year fell to $ 17 million.
“It simply came to my notice then. If you look at these revelations, these independent experts had visibility into Humm’s accounts and if they say next year’s earnings are $ 26 million, we would rely on that to make a forecast, ”he said.
“When they launched this new fiscal year 2022 cash NPAT and it is below [at $17 million]the first question i asked was, has anything happened in the last two months?
Some shareholders asked why Humm did not ask the independent expert to take another look at him given the market defeat he had used to drive the sale.
John Wylie, who owns 5% of Humm, was perceived as the engine of the Latitude deal. Josh Robenstone.
They went on to stress that they would have supported the deal to a value of even less than $ 260 million in the rank of independent experts, given the council’s statements on the fall in market prospects and the fall in profits. But Wylie said it was ruled out because the offer “became much less attractive over time.”
“It was secured in a tough market with zero bidding competition. It was also the right decision not to proceed with the sale when its value became much less attractive over time,” he said.
“While the current circumstances are disappointing for shareholders, they should be comforted to know that Tanarra’s interests are well aligned as we continue to be major shareholders in the company, a stake we have maintained for over three years.”
Mr. Wylie first bought Humm for $ 1.25 through his Tanarra investment vehicle in February 2019. He criticized short-term investors for complaining that they had been deprived of the right to vote on the deal.
“Observers should not give any serious weight to the damaging comments of short-term merger and acquisition hedge funds that seem interested in this business being sold without a reserve price. They have misinterpreted the situation and are the authors of the their own circumstances, ”he said.
“The simple fact is that they and other shareholders, whose private intentions during this process seem to have disagreed with their public statements, would have achieved their goals if an individual, Andrew Abercrombie, had not campaigned. to do so, or if he had reversed his opposition, they should have dealt with it. “
Mr Abercrombie increased his stake to 23 per cent under the provision of fluidity and launched a campaign to object to the deal. Many of those who voted “no” to Mr Abercrombie told The Australian Financial Review that they had only done so to pressure Humm to try a higher bid, and would have changed their votes before Tuesday’s deadline.
Mr Abercrombie was cautious as he pointed out the work ahead in terms of rebuilding the battered company.
“I note the decision of the president and other directors of Humm Group to step down,” Abercrombie said.
“I think it’s in the best interest of all Humm shareholders. The decision gives Humm a chance to start over. The hard work of rebuilding Humm is starting now and I hope to be a part of that renewal.”
New board, new challenges
Alistair Muir and Wylie resigned with effect immediately, while Christian and Rajeev Dhawan will leave as soon as their successors are found.
“This will allow a new board of directors to move the company forward and address the challenges and opportunities that lie ahead,” Humm said in a statement.
Ron Shamgar, head of TAMIM Asset Management’s Australian equity strategy, who on Monday had called for the resignation of Christian and Wylie, said the latest news was positive for Humm, but questioned the statement released on Tuesday afternoon defending the actions of the board. .
“This is The Muppet Show with steroids,” Shamgar said.
Ms Christian said on Friday that the board had tried to ask Latitude for a higher bid before ruling out the vote. But some shareholders also questioned whether the board’s tactics in lowering HCF’s prospects and profitability as a stand-alone business had made it more difficult to negotiate a better deal.