Scheme of Arrangement and Equity issue update
24 January 2022
Amigo Holdings PLC ("Amigo" or the "Company")
Scheme of Arrangement and Equity issue update
Amigo Holdings PLC (LSE: AMGO), a leading provider of guarantor loans in the UK, is updating the market on the proposed Schemes of Arrangement ("Schemes") in respect of the settlement of complaints liabilities associated with historical lending by Amigo Loans Ltd, a regulated subsidiary of the Company ("Redress Creditors"). Certain information about the Schemes has previously been announced on 6 December 2021 and 13 December 2021.
Amigo is seeking to secure the best result for Redress Creditors through the Schemes that is possible in the circumstances. In doing so, the Company must address specific concerns raised by the Court in relation to the previous proposed Scheme.
In particular, the Court: (a) was not satisfied that there was no room for further payments to Redress Creditors beyond those provided for by the Scheme; and (b) considered it would normally expect to see equity holders losing their economic interests where creditors were not being paid in full.
As detailed in the 6 December 2021 update, the New Business Scheme proposes an initial contribution of £97 million, to be generated from internal resources. A significant proportion of this initial contribution is derived from the run-down of the existing loan book. In order to secure the best result for Redress Creditors possible in the circumstances, the New Business Scheme will include provision for an additional payment to Redress Creditors in the event that the existing loan book generates a better return than currently anticipated.
As also stated in the update on 6 December 2021, the Company intends to raise capital, within one year of sanction of the New Business Scheme by the Court, to fund both the £15 million Scheme contribution and future lending. The equity raise is likely to be undertaken by a rights issue for existing shareholders, with a placing of unsubscribed shares to third party investors. The rights issue will be subject to the approval of the Company's shareholders after the New Business Scheme is sanctioned by the Court. If shareholders do not approve the rights issue, the New Business Scheme will revert into a wind down under which the shareholders will receive nothing in respect of Amigo Loans Ltd.
The New Business Scheme will require the Company to issue at least 19 new shares for every existing share in the Company. This will leave existing shareholders (unless they participate in the equity raise) with no more than 5% of the Company's share capital, reflecting a UK market standard level of economic interest for equity holders where creditors are not being paid in full.
Amigo will have up to a year from the sanction of the New Business Scheme to complete the new equity raise.
The Company believes that these provisions are necessary both to secure the best result for Redress Creditors through the Schemes that is possible in the circumstances and to address the specific reasons cited by the Court when rejecting the scheme proposal. Without these additional measures, the New Business Scheme is unlikely to be sanctioned.
The Company is continuing to keep under review and work with its advisors on the Schemes and will keep the market updated when appropriate.
If the New Business Scheme is not sanctioned (or if the Company's shareholders do not vote to approve the equity raise contemplated) Amigo Loans Ltd will enter a wind down Scheme or insolvency. In such a scenario, Redress Creditors will receive less than under the New Business Scheme, and the Company's shareholders would receive nothing in respect of Amigo Loans Ltd.
In these circumstances, the Company believes these provisions are in the interests of the Company's shareholders as well as securing the best result for Redress Creditors through the Schemes that is possible in the circumstances.
Gary Jennison, CEO of Amigo, said: "The Board is fully committed to providing the maximum amount of redress possible for qualifying creditors. Should creditors vote for the New Business Scheme and the Court subsequently approve it, these provisions provide additional protection for creditors and address certain of the concerns raised by the Court above the previous scheme. They are necessary for Amigo to survive and avoid insolvency."
ENDS
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.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014. The person responsible for this announcement is Roger Bennett, Company Secretary.
Contacts:
Amigo Holdings PLC investors@amigo.me
Kate Patrick Head of Investor Relations
Roger Bennett Company Secretary
Media enquiries Amigoloans@lansons.com
Tom Baldock 07860 101715
Ed Hooper 07783 387713
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