Consolidated Operations sets its sights on Thorn Equipment...

Consolidated Operations sets its sights on Thorn

Equipment finance provider Consolidated Operations is believed to be among the parties in talks to buy Radio Rentals owner Thorn.

A strategic review of Thorn has been under way through Gresham and COG is believed to be one of about four parties that has set its sights on the business.

COG counts former Pepper Group founder Patrick Tuttle among its directors and is listed on the Australian Securities Exchange with a market value of more than $100 million.

COG’s main operations are a small to medium enterprise equipment finance broking and aggregation business.

It also provides non prime commercial equipment leasing and is seen as an up and coming company that itself could find itself a takeover target as it remains highly acquisitive.

It is Australia’s largest equipment finance and aggregation group with about a 17 per cent market share of broker-originated asset finance.

Thorn provides alternative consumer and commercial leasing products, meanwhile, and consumer and commercial financing solutions.

Its businesses include Radio Rentals, RR Rentlo Reinvented and Thorn Business Finance.

This month, the business announced it would close eight of its Radio Rentals stores as more customers shift to online.

The company also flagged the departure of its chief executive Tim Luce, adding that its outlook continued to look challenging with declining group revenue, fluctuating arrears and general uncertainty in the retail industry.

It reported a $14.9m loss in May for the full year and its market value is $40m. Its total receivables, including a consumer leasing business and business finance lease book, are worth $489m.

The group is among listed finance providers that have been struggling, including Silver Chef and Axsess Today. Private equity has been trawling the space for opportunities and Cerberus Capital Management purchased Axsess Today while Next Capital acquired Silver Chef.

Buyout funds see opportunities in the space after the royal commission into the finance industry is likely to result in a crackdown on banks, prompting more borrowers to seek out non-bank lenders.

Thorn’s market value has been in decline for at least a year. One of its challenges is understood to be linked to a new product it introduced to the market several years ago.

A problem for the business is that it is under scrutiny by the corporate watchdog for charging excessive interest rates, and it is facing a class action.

Last year speculation grew that the Adelaide-based Radio Rentals company that shares the same name could be looking to buy Thorn’s Radio Rentals to prevent confusion, but Thorn said the business was not for sale.

Radio Rentals in South Australia sells electrical goods and furniture, while the listed Thorn Group owns a separate business with the same name.