John Wylie breaks silence over Humm after board quits en masse following Latitude deal flop

Tanarra Capital chief executive John Wylie has hit back at criticisms at the plan to sell Humm’s consumer finance business to Latitude.

Tanarra Capital chief executive John Wylie. Picture: David Caird

Tanarra Capital chief executive John Wylie has hit back at criticisms of the plan to sell Humm’s consumer finance business to Latitude, but conceded the extended time it took to conclude the deal left it exposed to deteriorating market conditions.

Mr Wylie quit the company’s board on Wednesday – as did every director apart from Andrew Abercrombie, Humm’s former chairman. Mr Abercrombie, the company’s largest investor, had led the campaign against the sale to Latitude.

In a letter to Humm’s outgoing chair Christine Christian, Mr Wylie defended the terminated sale, describing it as a good deal that had become “too exposed to adverse changes in economic and financial market conditions, especially in circumstances where one shareholder/board member was running an aggressive campaign against the transaction”.

Mr Wylie’s Tanarra remains a large shareholder in Humm.

In comments on Wednesday, Mr Wylie said it was right not to proceed with the sale as the value of the deal fell.

“While the present circumstances are disappointing for shareholders, they should take comfort knowing that Tanarra’s interests are well aligned given we remain substantial shareholders in the company,” he said.

“The simple fact remains that they and other shareholders, whose private intentions during this process appear to have been at odds with their public statements, would have seen their objectives achieved if … Andrew Abercrombie had not run the campaign he did, or if he had reversed his opposition.”

The majority of Humm’s board had pushed to sell the consumer lending arm, warning it was not profitable. Under the terms of the sale, Humm investors would received 150 million Latitude shares and $35m.

At the time the deal was announced, it valued the business at $350m. This had fallen below $245m by the time the sale was called off last week.

A trading update rushed out in recent weeks showed the division had not been profitable in the four months to April 30 after losses blew out, with Ms Christian warning the “trading environment is very tough” for the consumer lending business. However, the consumer lending arm was still sitting on $17.3m in profits between December and May.

Mr Abercrombie had opposed the deal, concerned it undervalued the potential of the consumer lending business, with recent market falls only worsening the potential value shortfall. He launched a campaign against the sale, as the looming deadline approached, encouraging shareholders to nix the deal.

Of the 50 per cent of shares that had been voted by Thursday evening – the night before the deal was pulled – 78 per cent were against the sale.

Humm shares fell a further 2c to close 3.8 per cent lower at 50c.

Analysts had repeatedly warned any potential failure of the deal would see a significant fall in Humm’s market value.

In a statement, the group of outgoing directors said they had decided “that they cannot remain on the board with Andrew Abercrombie” and that it was “in shareholders’ interests for changes to the composition of the board” to occur in an “orderly fashion”. Ms Christian and others will exit the board after replacements are found.

Mr Abercrombie said the resignation of the directors was in the best interest of shareholders and would allow it to make a fresh start. “The hard work of rebuilding Humm starts now,” he said.