Thorn Group Reject Buy Bid, Raise $15M
Radio Rentals owner, Thorn Group, has rejected a buy bid for its Business Finance division, choosing to raise capital via rights issue to “stablise” operations and settle its class action.
Announced to the ASX today, the group has raised $15.4 million (24c/share) after successfully completing the institutional component of a fully underwritten 1-for-1 accelerated non-renounceable entitlement offer.
The entitlement offer is fully underwritten by Shaw and Partners and will be sub-underwritten by several institutional investors including many existing Thorn shareholders.
Thorn has also launched a retail entitlement offer to raise another $23.3 million, at the same price (24c/share) and offer ratio (1-for-1) as the Institutional Entitlement Offer.
“At the present time the capital raising, in the form of the fully-underwritten non-renounceable rights issue, was the preferred course of action that enabled Thorn to stabilise its business operations, and provide the certainty and timing of cashflows that are required to settle the class action,” the company claims.
The news follows the $25 million settlement of its ‘Rent Try $1 Buy’ lease class action early this month.
The class action was launched in 2017, and follows claims of misleading and deceptive contract conduct for over 200,000 customers.
Customers state they were not eligible to purchase rented goods for $1 – incurring excessive lease charges – contrasting the company’s promotion.
According to Maurice Blackburn, some ‘Rent Try $1 Buy’ customers were forced to pay up to seven times the RRP for products.
Thorn also shelled out over $8 million to ASIC in January 2018, for remediation and penalties relating to customer leases inked between January 2012 – May 2015.
Radio Rentals stores in South Australia are not owned and operated by the Thorn Group. South Australian run Thorn Group stores are named ‘Rentlo Reinvented.’