Amigo Loans crashes as shareholders face wipeout from rescue plan

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UB-prime lender Amigo saw its stock fall further today after the company warned investors of facing huge losses from last-ditch hedge plans.

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Amigo said it is working on new compensation plans for customers who missed the sale of its guarantor loans. The previous scheme was rejected by both the regulator and the high court on the ground that the payout was too low.

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The new deterrence plan will still only offer partial payments but will be more generous.

CEO Gary Jenison said: “Clearly, we’ve taken longer than expected, but it’s important that we get this right to a fair outcome for all creditors, by making sure we listen to their views carefully.” and has fully addressed the concerns raised by them in the High Court and the regulator last May.”

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Amigo will be seeking more cash from investors to fund the new plan, and warned that it could cause “material dilution” for shareholders, giving them “no rights when they own a very small proportion of the group.” take.”

Failure to support the plans could force Amigo to “file for administration or other bankruptcy proceedings.”

Jenison said: “The potential material dilution for shareholders is a difficult but necessary consequence of our position. We have noted on several occasions, we are a bankrupt business, so there is no easy way out if we want to avoid administration. and the only other options are for managed wind-down or bankruptcy, which has worse consequences for both shareholders and customers.”

Shares of the already troubled lender crashed 3p, or 28%, to 7.6p. The stock was trading at a high of 297p in December 2018.

The update on rescue plans came with half-year results. Revenue declined 39% to £56.5 million in the six months to the end of September, and subscriber count fell 42% to 102,000. However, the company returned to profits as new compensation claims levels eased. The company made a profit before tax of £2.1 million.

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