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Highlights
- Subprime lending firm Amigo Holdings proposed a new scheme of arrangement with improved terms.
- The new arrangement received approval from the company’s independent customers' committee and will be voted on by redress creditors.
- The ICC and board believe the New Business Scheme is the preferred choice, estimating 42 pence in the pound under this option, compared to 29 pence in the pound under the Wind-Down Scheme.
Guarantor loans provider Amigo Holdings (LON:AMGO) proposed a new scheme of arrangement on Monday. The new arrangement includes improved terms and has received approval from the company’s independent customers' committee (ICC).
Amigo’s scheme of arrangement update
The company proposed two scheme options in its update today, the first being the New Business Scheme and the second the Wind Down Scheme.
The first option, which is the New Business Scheme, is dependent on the company restarting new lending and also upon Amigo completing a capital raise in a successful manner.
The second option, the Wind Down Scheme, will require the winding down of the Amigo Loans Ltd business. The company’s redress creditors will vote on both of the scheme options.
Should both scheme options be approved, they will both be submitted to the Court for sanction. The court hearing for the updated suggested schemes is likely to be held on 16 February next year.
New Business Scheme preferred by ICC & Amigo board
The ICC, as well as the company’s board, believe that the first option is the preferred option and will offer a better outcome for Creditors compared to the second option.
As per the new update, the New Business Scheme is expected to offer creditors 42 pence in the pound for the creditor’s claims value, in comparison with the Wind-Down Scheme, which is expected to provide about 29 pence in the pound for the same.
The company added that the New Business Scheme would be asked by the court to be considered first, as the favoured option of both the Board and the ICC, before contemplating the second option.
Should the first option not be sanctioned by the court, the company plans to ask the court to consider the second option, which is the Wind-Down scheme, as a fall-back choice.
The scheme arrangement is part of the company’s efforts to meet the redress claims in relation to historic loans. The company issued the PSL (Practice Statement Letter) to existing and previous customers (both debtors and backers) of Amigo Loans Ltd and to the FOS (Financial Ombudsman Service).
Amigo Holdings PLC (LON: AMGO) share price performance
Image source: Refinitiv
Amigo’s shares were down by 0.99 per cent, trading at GBX 6.00 on 13 December 09:04 AM BST. The financial services sectoral index was at 11,044.61, down by 1.23 per cent.
The company’s market cap was at £28.81 million as of Monday.
