Thorn sells trade and debtor finance
Recommendation
Thorn Group has sold its trade and debtor finance book for $39m. The sale price was above book value, but the realised amount will be slightly below book value after transaction fees.
The sale proceeds will be used to repay corporate debt, reducing the current balance to around $50m after having reduced it below $90m last year, as discussed in Thorn settles with ASIC. This brings Thorn into compliance with its corporate debt repayment schedule, well before its 30 September due date.
Thorn's net tangible assets per share remain around $1.20 after the sale but, by significantly reducing debt, it's now much less risky. SPECULATIVE BUY
Note: The InvestSMART Australian Small Companies Fund owns shares in Thorn Group. You can find out about investing directly in Intelligent Investor portfolios by clicking here.
Disclosure: The author holds Thorn Group via units in the InvestSMART Australian Small Companies Fund.