Shareholders in the dark as Thorn looks for $38m

Retail shareholders in Thorn Group are believed to be becoming increasingly agitated about the company’s decision to raise equity before announcing the outcome of a strategic review that was expected to lead to asset sales.

The company this week announced a $38.7m equity raising, underwritten by Shaw and Partners and sub-underwritten by various institutional investors including Forager Funds, Somers and Investors Mutual.

Thorn said in a statement to the market that it believed a rights issue was the preferred course of action to stabilise its business operations and provide certainty and timing of cashflows required to settle its class action.

Thorn said Consolidated Operations Group had expressed an interest in buying Thorn’s business finance division, but Thorn had opted not to proceed.

However, shareholders are unhappy about the fact that Thorn went ahead with the capital raising before offering details about the strategic review and after Consolidated Operations Group had made a formal approach to the company.

DataRoom revealed on August 20 that Consolidated Operations was in acquisition talks with Thorn.

In response to the article, the company said COG had “expressed interest” in buying parts of the Thorn Group.

However, it is now understood that COG had put forward an $82m fully underwritten cash bid for the finance division and was in exclusive due diligence to buy it.

Buying up shares in the company has been Duncan Saville’s Somers, which now holds about 19 per cent.

Somers is seen by some as more of an activist investor and owns more than 60 per cent of non-bank lender Resimac, which is listed on the Australian Securities Exchange.

The shareholder was expected to play the role of kingmaker when it came to the company’s strategic review outcome.

Working on the strategic review has been Gresham and the expectation now is that the company is likely to offload its Radio Rentals consumer loans book and retain its commercial finance division with about $280m of loans.