“The terminated agreement has hindered HCF’s progress, but has also produced positive results. I ask shareholders for their patience and I am confident that this company has a bright future,” he said.
A day before the sale was scrapped, Humm’s board said in an ASX update that its consumer finance arm’s after-tax net profit was down 60% from to the corresponding period, describing the business environment as very challenging due to intense competition, rising interest rates and weakening consumer confidence.
“Without the improved scale, which the Latitude transaction will bring, the outlook for HCF will be even more difficult,” the board said.
But on Friday morning, as they announced the termination of the sale, Humm’s board said the consumer finance arm was a “high-quality business” and signaled plans to review its management to restore profitability.
“Board and management remain enthusiastic about the prospects of flexicommercial. Humm remains in a heavily capitalized position with unrestricted excess cash and no drawn corporate debt,” the board said.
Christian said the continued erosion in Latitude’s share price has impacted the economics of the deal.
“I guess what changed yesterday afternoon was just the strategic logic of the transaction, and the fact that we were then outside the scope of the independent appraiser, which meant that the directors didn’t had really had no choice but to withdraw from the transaction because the recommendation was still dependent on the opinion of the expert.
“Of course, we monitor investor support, but really as directors, for us, we represent all of the shareholders. And so, based on that, we were really focused on what was in the best interests of all of our shareholders.
Ron Shamgar, head of Australian equities at Tamim Asset Management, represented the voting intention of about 2% of Humm’s share register. He said Humm’s board may have seen that the proxy votes were likely in favor of Abercrombie.
“Latitude couldn’t get out of this deal, they could only get out if it was rejected or if the Humm board mutually agreed to terminate it. Humm’s board therefore went against its Thursday morning recommendation in assessing the current proxy voting intention.
Going forward, Shamgar said the commercial side of the Humm was very profitable, but the consumer side needed to be restructured so that it could return to profitability, which should include exiting the international BNPL space. The recent turmoil could also see some directors leave the company, he said.
“For me, shareholders have shown their support for Abercrombie and if Abercrombie can’t work with the current board, then that needs to be changed. Otherwise, you don’t want a dysfunctional board. I think that we’ll find out over the next few months what’s going on there.
On Friday, Latitude thanked Humm and its board for considering HCF’s takeover bid.
“BPL represents less than 1% of Latitude’s revenues and receivables. Latitude Group is experiencing good organic volume growth, is profitable and well capitalized to seize a number of upcoming opportunities,” the company said.
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