TIDMAMGO
RNS Number : 6484U
Amigo Holdings PLC
06 December 2021
6 December 2021
Amigo Holdings PLC ("Amigo" or the "Company")
Scheme of Arrangement Update
As part of the Board's pursuit of a new Scheme of Arrangement
("Scheme") and after extensive negotiations with our Independent
Customer Committee ("ICC"), the Board issued a revised Scheme
proposal to the ICC on 12 November 2021. The revised offer
incorporated two distinct Schemes; the first, the 'New Business
Scheme', which is contingent on new lending restarting and Amigo
completing a successful equity raise. The second, a managed
wind-down of the Amigo Loans Ltd business under a Scheme framework
("Wind-Down Scheme").
The ICC has now confirmed its preference for the New Business
Scheme. The ICC shares the Board's view that the New Business
Scheme will provide creditors with greater returns than the
Wind-Down Scheme.
The Board intends to ask creditors to vote on both options, and
if both options are approved by creditors, to then submit both
options to the Court for sanction. The Court will be asked to
consider the New Business Scheme for sanction before it considers
the Wind-Down Scheme, because the New Business Scheme is the
preferred option of the ICC and the Board. If the Court does not
sanction the New Business Scheme, the Court will be asked to
sanction the Wind-Down Scheme as a fall-back.
In the event the Court sanctions the New Business Scheme, Amigo
is proposing initial cash contributions totalling GBP97m from
internally generated resources, alongside a further contribution of
GBP15m, being part of the proceeds from a new equity and capital
raise. The initial cash contribution compares to an amount of up to
GBP35m in the previous scheme proposal. As detailed in Amigo's
announcement of its financial results for the half year, released
on 29 November 2021, a number of factors, including the greater
clarity the business now has on the impact of Covid-19, have
contributed to its ability to significantly raise the initial cash
contribution. The proposed initial cash contribution also reflects
the lower expected balance adjustments resulting from continued
collections on the loan book compared with when the previous Scheme
was proposed and assumes future interest savings of up to GBP34m
from a possible early redemption of a significant proportion of the
outstanding senior secured notes.
While details of an equity raise to partly fund a return to new
lending have not yet been finalised, the GBP15m contribution to the
Scheme is expected to be funded from an equity raise and new
capital commitments of between GBP120m and GBP300m, of which it is
hoped to raise a minimum of GBP70m in new equity. It is required
that the new equity raise must be completed within a year of the
sanction of the Scheme by the Court.
The Practice Statement Letter ("PSL") explaining both Scheme
options and stating the ICC's preference, will now be sent to the
Financial Conduct Authority ("FCA") for review. This could result
in further changes to the proposal and to the PSL before it is sent
to the relevant creditors. Amigo is hoping to send the finalised
PSL to customers before the end of the calendar year.
While the Board is pleased that the ICC has confirmed its
preference for the New Business Scheme, the Board is keen to
emphasise that this is just the first step in a multi-step process
and a number of hurdles remain before a Scheme can be sanctioned.
Once the PSL is circulated, the Board will initiate the Court
process which will include a creditor vote on both options. The
Court process is expected to take at least four months. For the
preferred New Business Scheme to complete, once sanctioned it will
require both a successful equity raise and an FCA approved return
to lending. If these conditions are not met, the Board will look to
implement the managed wind-down of the Amigo Loans business. Amigo
has agreed with the ICC that the total net new lending under the
New Business Scheme will not be more than GBP35m until the
conditions have been met and GBP112m has been paid into the Scheme
fund. Amigo is also subject to an FCA enforcement investigation
that has not yet been resolved. The outcome of the FCA
investigation could result in a fine being imposed on Amigo. The
prospects of success of the New Business Scheme would be adversely
affected if the FCA investigation results in a fine or is not
resolved before capital is due to be raised as part of the New
Business Scheme. If neither of the New Business Scheme or the
Wind-Down Scheme is approved by the creditors or neither is
sanctioned by the Court, Amigo Loans Limited will enter into an
insolvency process.
We continue to work constructively with the FCA and have set out
below the FCA's position in relation to the Schemes, which remains
reserved at this time.
The FCA has not yet been provided with final details of the
Scheme proposals agreed with the ICC. The FCA is yet to receive
both the final terms of the Schemes or drafts of the explanatory
materials to be shared with creditors prior to any vote on the
Schemes. The FCA has therefore not completed its assessment of the
Schemes. The FCA has informed the firm that it reserves the right
to take any action as it may consider appropriate, including to
oppose the Schemes in court, once the terms of the Schemes have
been finalised and it has been provided with all of the information
requested from Amigo regarding the Schemes, or otherwise.
Further, the FCA continues to assess whether Amigo is failing
(or is likely to fail) to satisfy the FCA's threshold conditions
(minimum standards all authorised firms are expected to meet) and
its proposed approach to future lending. In light of the further
analysis that the FCA can be expected to complete, the FCA has
informed Amigo that there is a risk that the FCA may impose a
requirement on Amigo's regulatory permissions which restricts it
from continuing its business and which affects SchemeCo's ability
to implement the Scheme.
Gary Jennison, CEO of Amigo, said: "We are pleased that the
Independent Customer Committee has confirmed its preference for our
New Business Scheme and that we can now take the next step to
achieve a way forward for Amigo's creditors and other stakeholders.
We have listened carefully to its views over a number of months,
alongside addressing the concerns raised by the High Court and the
regulator last May, and I would like to thank its members for the
considerable time and commitment they have shown in helping us seek
a fair outcome for all creditors.
"We modelled our first Scheme proposal based upon forecasts of a
severe impact from Covid-19 upon our business. In the event,
Amigo's trading performance in terms of collections and impairments
has been better than expected throughout 2021 and the size of the
loan book has roughly halved in that time with a further 12 months'
worth of collections. Therefore, although the business remains
insolvent, Amigo is in a position where it can contribute a
significantly higher sum to those creditors due redress should we
be able to secure their support, the approval of the Court and then
subsequently complete a successful equity raise. This is a complex
process which, given our financial position, provides no perfect
path for either creditors or existing shareholders but we are an
important step closer today to addressing the historic lending
issues we face."
ENDS
Additional Information
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities, or the solicitation of any
vote or approval in any jurisdiction, pursuant to this announcement
or otherwise.
This announcement constitutes notice by Amigo Luxembourg S.A.
(the "Issuer") to the holders of the Issuer's 7.625% Senior Secured
Notes due 2024 (for the notes issued pursuant to Rule 144A of the
United States Securities Act of 1933, ISIN: XS1533928468 and Common
Code: 153392846; for the notes issued pursuant to Regulation S of
the United States Securities Act of 1933, ISIN: XS1533928625 and
Common Code: 153392862) (the "Notes") issued pursuant to pursuant
to Section 4.03(a)(3) of an indenture dated January 20, 2017 among,
inter alia, the Issuer, the guarantors named therein and U.S. Bank
Trustees Limited, as trustee and security agent. Amigo Holdings PLC
is the indirect parent company of the Issuer. This announcement
shall constitute a "Report" to holders of the Notes.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014. The
person responsible for this announcement is Roger Bennett, Company
Secretary.
-ENDS
Contacts:
Amigo Holdings PLC investors@amigo.me
Kate Patrick Head of Investor Relations
Roger Bennett Company Secretary
Media enquiries Amigoloans@lansons.com
Tom Baldock 07860 101715
Ed Hooper 07783 387713
Laura Hastings 07768 790752
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END
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