Investor FAQs

The High Court sanctioned Amigo’s Scheme of Arrangement in May 2022 to enable an equitable distribution of redress to all Amigo Scheme creditors with a valid claim against Amigo associated with past lending practices.

The New Business Scheme included both a ‘Preferred Solution’ and a ‘Fallback Solution'. For the Preferred Solution to go ahead, Amigo needed to return to lending by 26 February 2023 and complete a successful capital raise (with a 19 for 1 dilution) by 26 May 2023. While Amigo was able to return to lending, the Board has concluded that it will not be possible to raise the required funds by the deadline. It has therefore switched to the Fallback Solution, which is an orderly wind-down of the business.

What happens next?

The Fallback Solution requires that the trading subsidiary, Amigo Loans Ltd (“ALL”) stops lending with immediate effect and is placed into an orderly wind-down, with the result that all surplus assets after the wind-down are transferred to the Scheme creditors. In due course, ALL will be liquidated.

The Board of Directors do not expect the required capital raise to be successfully completed before 26 May 2023 as we have been unable to obtain the necessary firm commitments from potential underwriters and investors. Furthermore, having taken extensive advice from our professional advisers, we have sadly concluded that successfully executing another completely new scheme followed by a lower capital raise is highly unlikely, and, given that, the significant associated costs would therefore cause avoidable detriment to Scheme creditors.

In reaching this decision, the Board has considered a number of factors including:

• In reaching this decision, the Board has considered a number of factors including:
• the costs of implementing a new scheme;
• and the confidence that the capital, albeit a lower quantum, can be raised against the challenging ongoing market backdrop and sentiment around the sector in which Amigo operates; and
• the indications of interest for £11m of equity and £10m exchangeable notes received to date remain indications only and not firm commitments.

The Fallback Solution requires that the trading subsidiary, Amigo Loans Ltd (“ALL”) stops lending with immediate effect and is placed into an orderly wind-down, with the result that all surplus assets after the wind-down are transferred to the Scheme creditors.

In due course, ALL will be liquidated. The board also expects, in due course, to issue proposals to delist the shares of the Company from the London Stock Exchange.

Amigo’s licence to lend is through Amigo Loans Ltd. We would not be able to acquire a new licence to lend under a different legal entity in time to make it viable or have the funds to do so. All businesses under the Amigo Holdings PLC umbrella are therefore likely to be wound down.

All surplus assets after the wind-down will be transferred to the Scheme creditors. There will be no value attributed to the Company’s ordinary shares.

The senior secured notes were repaid on 18 March 2023.

The Board has always kept contingency options under review. Any amendments to the Scheme would need to have been done by pursuing an entirely new Scheme and the costs and time it would take needed to be considered carefully. That is what the Board has done. We also had very clear direction that the existing scheme must be pursued to its utmost before considering a new scheme otherwise any potential investors would opt for the Scheme which excluded the Scheme contribution and creditors would not have any remaining possibility of receiving the £15m. This only occurred when talks with the final investor who could potentially underwrite the full £45m concluded.

There have been a number of reasons given. Not least this last year has been one of the most difficult markets for fund raising in decades.

As we only started lending again in October, there is a limited track record for our current products and a difficult backdrop for our potential customers. Whilst it is right that lenders properly assess affordability for new loans to customers, the current affordability challenges for many households in the UK has led to significantly lower conversion rates under our RewardRate pilot lending scheme. As noted in our General Meeting statement on 8 March 2023, conversion improved as we progressed through the lending pilot but the business model is not yet proven and although there is strong potential demand, current affordability challenges for UK households mean most customer applications have to be rejected. Some investors were sceptical that the volumes in the business plan could be written in the current regulatory environment.

We wanted to do this and looked into every way that it might be possible. However, the overriding legal advice we received was that we could not solicit investment, even an indication of interest, without issuing a prospectus and if we were to survey existing shareholders, we would not be able to verify the result and should therefore not include it in the Boards considerations. Added to this, with around 8,000 shareholders, mostly holding through a third-party broker, it is very difficult to identify and therefore contact, the majority of our shareholders.

Under the Preferred Solution of the Scheme, within 10 days of the capital raise at least £15m would be paid directly to the Scheme creditors. Without a larger sum of remaining working capital, after meeting the Scheme contribution and paying the costs associated with the raise, we would not be able to continue as a going concern. We would also not meet the FCA’s threshold conditions.

The Board’s assessment has been based on a number of factors – not only the viability of the Scheme and capital raise, but also on the confidence in the business model under today’s regulatory environment and the challenges that presents in times of heightened economic stress for our customer demographic and the associated affordability issues.

Given the analysis that a new Scheme, to amend the terms of the existing Scheme, is highly unlikely to succeed and the uncertainty around the business model in the current regulatory environment, it would be irresponsible for us to ask our shareholders to commit further funds.

From the very beginning we’ve had to consider multiple interests as is required by law. A successful Scheme was the only lifeline for the company and for shareholders to retain some value but any Scheme had to offer a fair financial offer to creditors due redress. The first Scheme was deemed to be too favourable to shareholders. It was rejected by the High Court and Amigo returned with a second Scheme to address concerns over the fairness of the financial offer to Scheme creditors, successfully achieving both creditor and court backing.

The economic and market environment has moved against us considerably since our Scheme, which was formulated in late 2021 / early 2022 and sanctioned in May 2022. This has severely impacted both our ability to raise capital and the affordability of loans for our potential customers.

Having taken extensive advice from our professional advisers, we have sadly concluded that successfully executing another completely new Scheme followed by a lower capital raise is highly unlikely, and, given that, the significant associated costs would therefore cause avoidable detriment to Scheme creditors.

We are deeply regretful that we have not been able to find a route forward, but we have left no stone unturned.