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    AMGO   GB00BFFK8T45

AMIGO HOLDINGS PLC

(AMGO)
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UK court rejects subprime lender Amigo's rescue plan

05/25/2021 | 05:35am EDT

LONDON (Reuters) - London's High Court has rejected a rescue plan from subprime lender Amigo that would have cut compensation payouts to customers for mis-selling loans, sending the company's shares plunging more than 50% on Tuesday.

Britain's Financial Conduct Authority (FCA), which opposed the scheme in court, said it thought Amigo could propose a fairer deal for customers.

Subprime lenders in Britain have been hit by a regulatory clampdown in recent years that has led to a wave of claims, and in some cases compensation payouts, for mis-selling loans. The effect of the COVID-19 pandemic has added to the strain.

Amigo - which has 137,000 current customers and has lent to 500,000 people since 2005 - had applied to the High Court for permission to cap payouts, saying a surge in claims threatened it with collapse.

In his judgment, Mr Justice Miles said the company's counsel had said an administration was both probable and imminent without the scheme.

But he said he agreed with the FCA that Amigo did not face an immediate liquidity crunch and urged the company to propose a fairer deal that spread losses with other stakeholders.

Amigo's shares tumbled as much as 61% in early trading.

The lender said its board was reviewing all options including an appeal after the court's decision.

"We suspect a potential sweetening of the terms must be under very careful consideration to avoid an outright collapse of the business into administration," Goodbody analyst John Cronin wrote in a note.

The FCA said other finance firms should take account of the judgment, adding it had "significant concerns" about schemes being used to unfairly avoid paying redress to customers.

Amigo specialises in guarantor loans, providing finance to customers with poor credit histories if they are guaranteed by a friend or family member.

Rival Provident Financial quit its around 140-year-old doorstep lending business this month.

Amigo's plan had drawn criticism from politicians and consumer groups.

Around 95% of votes cast by current and former Amigo customers ahead of the court hearing were in favour of the proposal.

Mr Justice Miles in his judgment said he agreed with the FCA that customers lacked the necessary information or experience to assess potential alternative options when voting on the scheme.

(Reporting by Kirstin Ridley and Iain Withers; editing by Rachel Armstrong, Mark Potter and Jason Neely)

By Kirstin Ridley and Iain Withers


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AMIGO HOLDINGS PLC -0.61% 8.91 Delayed Quote.5.44%
PROVIDENT FINANCIAL HOLDINGS, INC. 1.60% 17.13 Delayed Quote.9.04%
PROVIDENT FINANCIAL PLC 0.71% 285.4 Delayed Quote.-7.04%
All news about AMIGO HOLDINGS PLC
07/14PROVIDENT FINANCIAL : UK regulator won't oppose Provident's doorstep lending pay..
RE
07/03Certain Ordinary Shares of Amigo Holdings PLC are subject to a Lock-Up Agreem..
CI
06/30NSF to shut guarantor loans unit amid British sub-prime lender woes
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06/25EUROPE : European stocks remain below record highs after volatile week
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06/25European stocks remain below record highs after volatile week
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06/25FTSE Nudges Higher After BOE Decision, US Infrastructure Deal
DJ
06/25AMIGO : Britain's ailing Amigo secures funding line waiver extension
RE
06/25FTSE 100 Set for Muted Start After BOE Decision
DJ
06/25Amigo Extends Securitization Facility Waiver Period
DJ
06/21AMIGO : Provident says EY backs lender's view that doorstep unit had no value
RE
More news
Financials
Sales 2021 184 M 256 M 256 M
Net income 2021 -93,0 M -129 M -129 M
Net Debt 2021 - - -
P/E ratio 2021 -
Yield 2021 -
Capitalization 42,3 M 58,8 M 58,8 M
Capi. / Sales 2021 0,23x
Capi. / Sales 2022 0,41x
Nbr of Employees 400
Free-Float 50,9%
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Technical analysis trends AMIGO HOLDINGS PLC
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Consensus
 
Mean consensus SELL
Number of Analysts 1
Last Close Price 8,91 GBX
Average target price 10,00 GBX
Spread / Average Target 12,2%
EPS Revisions
Managers and Directors
Gary Antony Jennison Chief Executive Officer & Non-Executive Director
Michael John Corcoran Chief Financial Officer & Director
Jonathan Caldwell Roe Chairman
Maria Darby-Walker Non-Executive Director
Michael Bartholomeusz Non-Executive Director