The Takeovers Panel has intervened in a battle for control of finance company Thorn Group, ordering that the company’s major shareholder, investment manager Somers Ltd, cannot exercise any voting rights attaching to shares received through a dividend reinvestment plan.
Last month, Thorn announced a special dividend and the application of its dividend reinvestment plan to the special dividend.
Shareholder Forager Funds Management was not happy about this, complaining to the Takeovers Panel that the application of the DRP to the special dividend was designed to enable Somers Ltd, which holds 19.9 per cent of Thorn, and its associates to acquire “further control over the share in Thorn in a manner that is unacceptable”.
Somers Ltd is chaired by Warren McLeland, who is also chair of Thorn’s board.
Under McLeland’s leadership there has been comprehensive board renewal, with most of the current board members appointed in 2019.
This has not gone down well with some shareholders, who requested a meeting to consider removing the current directors and appointing new ones.
Thorn tried to stop the meeting and the matter ended up in court. Last month, the Supreme Court of Victoria ruled that the shareholder notice requesting the meeting was valid.
The Takeovers Panel received an application from shareholder Vaspip 2 Pty Ltd, one of the shareholders that had called the meeting, complaining that Thorn has failed to call the meeting and that the board was delaying the meeting to give Somers more time to acquire further control of Thorn’s voting shares.
“Thorn’s conduct will, if not remedied, permit Somers to acquire further control over voting shares in Thorn other than in an efficient, competitive and informed market,” Vaspip complained.
The Takeovers Panel said it was making interim orders to maintain the status quo, while it undertakes a more thorough review of the matters raised by the complainants.
In addition to ordering that Somers cannot exercise any voting rights attaching to shares received through a dividend reinvestment plan in respect of the special dividend announced last month, it ordered that neither Somers nor any of its associates may dispose of, transfer or grant any security interest over any shares issued to it under Thorn’s DRP in respect of the special dividend.
Thorn has been through difficult times. It made a big payout last year to settle a class action, which tipped it into loss. Its revenue has been under pressure and this year it closed its 62 Radio Rentals stores.
And its C-suite has had a revolving door.