Humm chairman Christine Christian and directors John Wylie, Alistair Muir quit board of directors after collapse of Latitude deal

Humm chairman Christine Christian and directors John Wylie, Alistair Muir quit board of directors after collapse of Latitude deal

“The events leading to the termination of the proposed sale of Humm consumer finance (HCF) to Latitude have caused the majority directors of Humm Group to conclude that they cannot remain on the board of directors with Andrew Abercrombie,” Humm said in a statement to the ASX on Wednesday.

“This will enable a new board of directors to take the company forward and deal with the challenges and opportunities ahead,” Humm said in a statement.

John Wylie was perceived as the driving force behind the deal with Latitude. Paul Jeffers

Ron Shamgar, head of Australian equities strategy at TAMIM Asset Management, who on Monday had called for the resignations of Ms Christian and Mr Wylie, said the latest news was positive for Humm, but he questioned the statement released late on Tuesday defending the board’s actions .

“This is The Muppet Show on steroids,” Mr Shamgar said.

Mr Abercrombie is understood to have had support from Humm’s two biggest shareholders – Renaissance Capital and entities associated with Duncan Saville – in voting against the proposed sale of HCF to Latitude.

As the lone voice of dissent against the deal on Humm’s board, Mr. Abercrombie mounted a campaign to oppose the sale saying the $35 million in cash and 150 million shares offered by Latitude undervalued the company.

Agreed to ‘mutually terminate’

The Humm board responded to Mr Abercrombie’s campaign by telling shareholders to take the offer, given the division faced significant challenges. It took the somewhat unorthodox step of releasing of information that the unit had been “unprofitable” during the first five months of the year while shareholders were gunning for a higher offer.

Ms Christian on Friday said the majority directors agreed to “mutually terminate” the deal because the value fell below the bottom of the range listed in the independent expert’s report of $260 million. When first put to the market in January, the deal was worth $335 million but had fallen to $245 million by the time it was scrapped.

Morningstar analyst Shaun Ler questioned what had “materially changed” in the month between the independent expert’s report being tabled and the release of information showing Humm’s profits had declined from its forecast $25 million to $17 million.

Some shareholders expressed anger, saying they had voted against the deal early to pressure the board to go back and ask Latitude for more cash to offset the falling value of the scrip component of the deal.

But instead of having until the following Tuesday to change their votes, the deal was abruptly terminated on Friday morning after the board saw that 78 per cent of the 50 per cent of early votes were against the deal.

Ms Christian said the board had tried to ask Latitude for a higher offer before scrapping the vote. But some shareholders also questioned whether the board’s tactics in talking down HCF’s prospects and profitability as a standalone business had made it more difficult to negotiate a better deal.

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