Amigo Holdings decides to wind down after failed capital raise

By Sarah Lizee

Olympia, Wash., April 3 – Amigo Holdings plc has decided to wind down after failing to raise £45 million of new capital to restructure its debt, according to filings made recently with the London Stock Exchange.

As previously reported, the company has been trying to implement a restructuring through a scheme of arrangement that was court-sanctioned in May 2022.

The scheme included a preferred solution, conditional on the completion of a 19:1 capital raise by May 26, 2023, followed by the contribution of a minimum £15 million payment to a scheme fund for creditor reimbursement, and a fallback solution, comprising the wind-down of the business.

Since October 2022, Amigo's financial advisers and management team had spoken to about 200 potential investors in the process to raise capital.

Amigo said this process was undertaken against an increasingly challenging economic backdrop in the United Kingdom which has, in turn, negatively impacted capital markets and the outlook for consumer credit.

“Clearly the economic and market environment has moved against us considerably since our scheme, formulated in late 2021/early 2022, was sanctioned last May,” Danny Malone, chief executive officer of Amigo, said in a March 23 notice.

“This has severely impacted both our ability to raise capital and the affordability of loans for our potential customers, coupled with tighter lending controls.”

The wind-down of the business, during which the existing loan book will continue to be collected, will last for about a year.

The scheme claims process is unaffected. However, there will be an impact to the total compensation scheme creditors will receive, as they will not receive a share of the minimum £15 million scheme contribution that was to be raised from investors, and the turnover provision from the new business scheme will be replaced by the residual surplus under the fallback solution, which will result in a smaller pool of distributable funds.

The company said Monday that four charges created between March 13, 2017 and May 17, 2019 to support the issue of the 7 5/8% senior secured loan notes have been satisfied following the redemption of the outstanding £50 million of the loan notes.

Peel Hunt LLP will cease to act as the company's corporate broker and financial adviser on April 29.

Bournemouth, U.K.-based Amigo is a guarantor loan company.

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