Your Vote is Important to the Future of Thorn
An Extraordinary General Meeting (EGM) is being held on Thursday 3 December 2020, to decide the future of Thorn Group Limited (Thorn).
While reserving our rights, Forager currently intends to vote FOR and support each of the resolutions. Supporting these resolutions, by marking each resolution FOR on your Proxy Form, is a vote to change the current Board of Directors.
- A group of smaller shareholders have forced Thorn to call an extraordinary meeting to replace two Somers representatives on the board
- While reserving our rights, Forager currently intends to support each the resolutions
Over the past few months, Thorn has announced a large fully-franked dividend, a future share buyback, an extraordinary meeting to consider replacing existing directors and a positive operational update suggesting the company is swimming in cash.
The cash is coming from customer payments at Thorn’s Radio Rentals business, which has permanently closed its physical stores and is not writing much new business. As customer leases come to an end over the next few years, that cash inflow will come to an end. But there is, potentially, plenty more to come in the meantime.
While a $0.075 recent dividend equates to a total of $24m, Thorn had $61m of available cash at the end of September and no corporate debt. We expect it to generate another $50m over the coming year.
Extraordinary general meeting
On 3 December 2020, Thorn will hold a meeting to consider removing the two Non-Independent directors (representatives of Thorn’s largest shareholder, Somers Ltd) and appointing two new directors.
Forager reserves the right to change the way it votes, but currently intends to support all resolutions at this meeting.
The existing board has had more than twelve months to deliver a detailed business plan or other alternatives for the sale, reconstruction or closure of the remaining business. The risk for shareholders, by supporting the current board, is that the vast amounts of capital being returned via the Radio Rentals rundown is squandered or lost.
We believe all options should be considered by a new Thorn board, should the resolutions be carried, including a potential sale of all or part of the business. At the first appropriate opportunity, should new directors be appointed at the upcoming meeting, we plan to contact and discuss with them how we can best support any new board.
To other Thorn shareholders, we recommend getting your vote in early.
There is every chance the outcome of this EGM will be extremely close, so your vote is important in determining the future of Thorn.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.