Amigo Loans customer committee puts weight behind resumption of lending

Amigo Loans announced on Monday that its independent customer committee (ICC) has confirmed its preference for the company’s “new business” scheme of arrangement, which would see the company resuming new lending and making a £97m initial cash contribution to its creditors.

The company said the committee shared its view that the new business scheme would provide creditors with greater returns than the wind-down scheme.

It said it would ask creditors to vote on both options, and if both options were approved, to then submit them to the court for sanction.

The court would be asked to consider the new business scheme for sanction before it considers the wind-down scheme because of the ICC’s and its own preference.

While details of an equity raise to partly fund a return to new lending had not been finalised, Amigo said a £15m contribution to the scheme after the initial contribution was expected to be funded from an equity raise and new capital commitments of between £120m and £300m, of which it hoped to raise at least £70m in new equity.

“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,” said chief executive officer Gary Jennison.

“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.”

Jennison said that Amigo's trading performance in terms of collections and impairments had been better than expected throughout 2021, with the size of the loan book roughly halving 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.”