In a statement to the ASX on Wednesday, the majority directors of Humm announced their plans to resign after the proposed sale of Humm Consumer Finance (HCF) to Latitude Group was terminated last week.
Directors Alistair Muir and John Wylie have both resigned effective immediately while Carole Campbell, Rajeev Dhawan and chairman Christine Christian will exit once replacement directors have been appointed.
In the wake of the terminated deal, the majority of directors stated that they could not remain on the board of directors with the company’s founder, former chair and majority shareholder Andrew Abercrombie.
“The majority directors believe that it is in shareholders’ interests for changes to the composition of the board of directors to be made in an orderly fashion,” they said.
“This will enable a new board of directors to take the company forward and deal with the challenges and opportunities ahead.”
Last Friday, Humm and Latitude confirmed they had mutually agreed to terminate the sale due to “major disruption in financial markets”.
The deal would have seen Latitude pay $35 million in cash and 150 million shares for Humm’s buy now, pay later (BNPL) and credit card operations, and was originally announced in February with a total value of $335 million.
“The Board of Humm continues to believe that HCF is a high-quality business and intends to review HCF’s strategic direction to focus on its core products and markets in order to restore profitability,” the company said in a statement last Friday.
Prior to the resignation announcement, Humm’s chairman said that Mr Abercrombie had undertaken what she described as a strident campaign against the sale and had strongly encouraged shareholders to vote against the transaction.
“Much of the commentary he published was emotion-driven, inflammatory, and provided little clarity on what precise future strategy he envisages for HCF, or on what basis he believed Latitude was going to pay more for HCF,” Ms Christian said in a statement on Tuesday night.
“There is still essentially no clarity on the future strategy he envisages for HCF.”
Ms Christian said that the majority directors had asked Latitude to improve the terms of the offer, as the implied value of the sale had fallen considerably due to a decline in Latitude’s share price of approximately 30 per cent, however the company refused.
“The majority directors believe Andrew Abercrombie overplayed his hand quite fundamentally in a transaction that could have been very beneficial for shareholders,” she said.
“The near 30 per cent increase in the Humm share price to 93c when the transaction was first announced underscores the initial very positive market assessment of this deal before his negative campaign began.”
The Humm chairman said she was proud of the actions of the majority directors despite facing “aggressively worded” legal threats from Mr Abercrombie.
“Shareholders should be aware that one such letter included an instruction that the Latitude offer should be withdrawn from being put to shareholders for a vote, which would have denied shareholders the democratic right to vote on a transaction, essentially because he alone disagreed with it,” Ms Christian said.
“This was the entire board of highly experienced people acting unanimously in all these decisions, excluding one lone dissenting director.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.