Thorn Shareholders Query Proposed Buy Bid
Shareholders of Radio Rentals owner, Thorn Group, have reportedly expressed concern over the company’s decision to raise equity before announcing the results of a strategic asset review.
According to The Australian, several shareholders were unhappy Thorn progressed capital raising without disclosing more from its strategic review, including details about a proposed acquisition offer.
As previously reported, Thorn informed the ASX it had received a buy bid for its Business Finance division, but chose to raise capital via rights issue to “stablise” operations and settle its class action.
The Australian’s DataRoom claims Consolidated Operations had in fact put forward an $82 million fully underwritten cash bid for Thorn’s finance division, and was amidst exclusive due diligence to purchase.
Gresham has reportedly been conducting Thorn’s strategic review, with market watchers expecting it will retain its commercial finance division, but offload its Radio Rentals consumer loans book.
Thorn is currently pursing a $38.7 million equity raising:
“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 said to the ASX.
The news follows the $25 million settlement of Radio Rentals’ ‘Rent Try $1 Buy’ lease class action.
The class action was launched in 2017 amid 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.’