REG - Amigo Holdings PLC - Scheme of arrangement update

Amigo HoldingsAnnouncement

16/01/2023 07:00

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RNS Number : 7547M  Amigo Holdings PLC  16 January 2023

16 January 2023

Amigo Holdings PLC

 

Scheme of arrangement update

Amigo Holdings PLC ("Amigo" or "the Company"), a provider of mid-cost credit
in the UK, is today giving an update on its proposed capital raise and on
lending.

Capital Raise

Amigo's Scheme of Arrangement, sanctioned by the High Court in May 2022 (the
"Scheme"), contains a preferred solution which is conditional on the
completion of a 19:1 capital raise by 26 May 2023 (the "Capital Raise"),
followed by the contribution of a minimum £15m payment to the Scheme fund for
creditor redress.

Following receipt of FCA approval to return to lending in October 2022, Amigo
commenced a marketing process to raise equity and debt to support its growth
plans and certain Scheme conditions. Amigo has secured term sheets for debt
facilities which it believes are capable of execution following further
discussions with lenders. However, to-date it has been unable to secure a
commitment from a cornerstone investor to underwrite the whole of the Capital
Raise. A number of investors have expressed possible interest in making a
minority investment. Amigo is therefore assessing whether there is sufficient
interest for a syndicate of such investors to be formed in order to support a
£45m Capital Raise. As part of that process, professional investors
interested in participating should contact Peel Hunt or Ashcombe Advisers this
week (relevant contact details are provided below).

The Board continues to seek the best possible outcome for creditors,
employees, shareholders, and other stakeholders. As outlined previously, if
the Capital Raise is not completed, or the Board determines that it cannot be
achieved by 26 May 2023, the Scheme will revert to the fallback solution
outlined in the Scheme (the "Fallback Solution"), which is an orderly
wind-down of the business. If the Fallback Solution is triggered, Scheme
creditors will not receive the minimum £15m Scheme contribution that was to
be raised from investors, and will, as a result, share in a smaller pool of
funds. Work continues with adjudicating claims, and it is, therefore, not yet
possible to give an accurate determination of the total amount of compensation
Scheme creditors will receive in terms of pence in the pound. It is expected
that at least £97m, the amount committed to the Scheme excluding the proceeds
from the Capital Raise, will be available for Scheme creditors to share pro
rata to their adjudicated claims. However, the higher-than-expected volume of
complaints received in the Scheme will also impact the final pence in the
pound received by Scheme creditors.

Amigo's cash position remains strong and, in the event the Fallback Solution
is invoked, the seniority of the secured notes will be respected. The Fallback
Solution would result in no value being attributed to the Company's ordinary
shares.

Pilot lending

The Company initiated a pilot lending programme in October 2022, shortly after
receiving approval from the FCA to return to lending, under certain agreed
conditions.

The pilot has enabled Amigo to test its proposed return to lending policies
and procedures in a controlled environment. While demand from both direct and
indirect channels has been strong, volumes of loans paid out have been very
limited. This is due in part to an initial focus on testing and refining
Amigo's new technology platform and the processes in place. It also reflects
the Company's cautious approach to underwriting given the prevailing market
conditions and, specifically, the impact on affordability for customers of the
increased cost of living. Consequently, the pilot programme has been extended
past the initial minimum two-month period. Depending on the outcome of the
Capital Raise process as discussed above, this pilot will continue for a
further as yet unknown period until sufficient loans have been written to
confirm that the policies and processes support responsible lending. Learnings
from the pilot continue to be applied to both the customer journey and
products, and originations should increase as a result.

Third-party outcomes testing to provide further assurance on systems and
controls is expected to begin this month. Following the end of the pilot
lending phase, the FCA will consider the impact on consumers of Amigo
returning to lending on a wider scale, and whether the results of the outcomes
testing demonstrate that Amigo is able to continue to meet the regulator's
expectations.

Danny Malone, Chief Executive Officer commented:

"The Board and senior executives have worked continuously over the last few
months to secure the future of the business and our focus remains on finding a
solution that is in the best interests of all our stakeholders. It is
disappointing that we have so far been unable to identify the requisite
equity backers for the business. However, we are continuing with our efforts
to put together an equity investor consortium as expeditiously as possible. We
realise that the economic backdrop since we announced the Scheme has changed
substantially. This has made the process of raising equity capital to support
the Scheme conditions significantly more challenging than expected.

"Given the potential interest for minority investments, we will strive for a
positive outcome over the coming days as we are committed to delivering a
better outcome for creditors, colleagues, and shareholders as well as
customers who deserve access to attractive, mid-cost credit products. I would
like to thank all our employees and our partners for their efforts to date."

Shareholders

Amigo will be hosting a call for shareholders today at 1.00pm (UK time). Dial
in details are as follows:

Join Zoom Meeting
https://us02web.zoom.us/j/88351163557?pwd=WjVpUHluOFR0WkJOcURTNy9sSVZyZz09
(https://www.google.com/url?q=https://us02web.zoom.us/j/88351163557?pwd%3DWjVpUHluOFR0WkJOcURTNy9sSVZyZz09&sa=D&source=calendar&ust=1674232444561109&usg=AOvVaw2qJ64H95CI2TKkDpHLHNmt)

Meeting ID: 883 5116 3557

Passcode: 808536

Or:     +44 203 481 5237

Bondholders

Amigo will be hosting a call for bondholders today at 2.30pm (UK time). Dial
in details are as follows:

Join Zoom Meeting
https://us02web.zoom.us/j/85740066100?pwd=RlhWUjhHL3grN2xJTDk2b1YwejZSQT09
(https://www.google.com/url?q=https://us02web.zoom.us/j/85740066100?pwd%3DRlhWUjhHL3grN2xJTDk2b1YwejZSQT09&sa=D&source=calendar&ust=1674232444561109&usg=AOvVaw0QEOLyHiHLtr-oMiUDVzHr)

Meeting ID: 857 4006 6100

Passcode: 386000

Or:  +44 208 080 6591

 

Enquiries

 Company
 Amigo Holdings PLC         investors@amigo.me
 Kate Patrick               Head of Investor Relations
 Roger Bennett              Company Secretary

 Media enquiries            Amigoloans@lansons.com
 Tony Langham               07979 692287
 Tom Baldock                07860 101715
 Ed Hooper                  07783 387713

 Peel Hunt LLP              020 7418 8900
 James Britton
 Oliver Jackson

 Ashcombe Advisers LLP      0207 529 5800
 Andreas Wesemann
 Adrian Hobcroft

About Amigo Loans

Amigo is a public limited company registered in England and Wales with
registered number 10024479. The Amigo Shares are listed on the Official List
of the London Stock Exchange. Since October 2022, Amigo has offered guarantor
loans and non-guarantor personal loans under its RewardRate brand. Both
products reward customers for on-time payments with an annual, interest-free,
payment holiday and the opportunity to reduce the effective APR, encouraging
better financial management and facilitating a long-term improvement of
customers' credit scores and financial mobility. Amigo has provided guarantor
loans in the UK from 2005, offering access to mid‐cost credit to those who
are unable to borrow from traditional lenders due to their credit histories.
The guarantor loan concept introduces a second individual to the lending
relationship, typically a family member or friend with a stronger credit
profile than the borrower. This individual acts as guarantor, undertaking to
make loan payments if the borrower does not. Amigo's back book of loans issued
pre-November 2020 is in the process of being run off with all net proceeds due
to creditors under a Court approved Scheme of Arrangement. Amigo Loans Ltd and
Amigo Management Services Ltd are authorised and regulated in the UK by the
Financial Conduct Authority.

Forward looking statements

This report contains certain forward-looking statements. These include
statements regarding Amigo Holdings PLC's intentions, beliefs, or current
expectations and those of our officers, Directors and employees concerning,
amongst other things, our financial condition, results of operations,
liquidity, prospects, growth, strategies, and the business we operate. These
statements and forecasts involve risk, uncertainty, and assumptions because
they relate to events and depend upon circumstances that will or may occur in
the future. There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied by these
forward-looking statements. These forward-looking statements are made only as
at the date of this announcement. Nothing in this announcement should be
construed as a profit forecast. Except as required by law, Amigo Holdings PLC
has no obligation to update the forward-looking statements or to correct any
inaccuracies therein.

Market Abuse Regulations

The information contained within this announcement would have, prior to its
release, constituted inside information as stipulated under Article 7 of the
Market Abuse Regulations (EU) No.596/2014 as incorporated into UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 (together, "UK MAR").
Upon the publication of this announcement via a regulatory information
service, this inside information will be considered to be in the public
domain. For the purposes of UK MAR, the person responsible for arranging for
the release of this information on behalf of Amigo is Danny Malone, CEO.

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.

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