Business

Hmmm, Latitude walk away from sale

“The terminated deal has inhibited progress for HCF but also produced some positive outcomes. I ask shareholders for patience and am confident this company has a bright future,” he said.

A day before the sale was abandoned, the Humm board said in an update to the ASX that cash net profit after tax for its consumer finance arm was down 60 per cent compared to the corresponding period, describing the trading environment as very tough due to intense competition, rising interest rates, and weakening consumer sentiment.

“Without enhanced scale, which the Latitude transaction will deliver, the outlook for HCF will be even more challenging,” the board said.

But by Friday morning, as they announced the termination of the sale, the Humm board said the consumer finance arm was a “high-quality business”, and flagged its intent to review its direction to restore profitability.

“The board and management remain excited about flexicommercial’s prospects. Humm remains in a strongly capitalized position with surplus unrestricted cash and no drawn corporate debt,” the board said.

Andrew Abercrombie, Humm’s founder and major shareholder, has been campaigning against the sale.Credit:Craig Sillitoe

Christian said the continued erosion of Latitude’s share price had impacted the economics of the deal.

“I suppose what changed yesterday afternoon was just the strategic rationale of the transaction, and the fact that we were then outside of the independent expert’s range, which meant that the directors had had no option really but to withdraw from the transaction because the recommendation was always contingent on the expert’s opinion.”

“Of course we were monitoring investor support, but really as directors, for us, we represent all shareholders. And so, on that basis, we were really focused on what was in the best interest of all of our shareholders.”

Ron Shamgar, head of Australian equities at Tamim Asset Management, represented the voting intention of about 2 per cent of Humm’s share register. He said the Humm board may have seen that the proxy votes were likely in favor of Abercrombie.

“Latitude could not get out of this deal, they could only get out if it gets voted down or if the board of Humm mutually agreed to terminate. So the Humm board basically went against their recommendation from Thursday morning by gauging the current proxy voting intention.”

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Going forward, Shamgar said the commercial side of the Humm was very profitable, but the consumer side needed to be restructured so it can return to profitability, which should include exiting the international BNPL space. The recent turmoil could also see some directors potentially leave the company, he said.

“To me, the shareholders have shown support for Abercrombie and if Abercrombie can’t work with the current board, then that’s got to be changed. Otherwise you don’t want a dysfunctional board. I think we’ll find out over the next few months what happens there.”

Latitude on Friday thanked Humm and its board for consideration of the offer to acquire HCF.

“BNPL represents less than 1 per cent of Latitude’s revenue and receivables. Latitude Group is experiencing good organic volume growth, is profitable and well capitalized to execute on a number of opportunities ahead,” the company said.

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