The Amigo Holdings PLC (LON: AMGO) share price plunged 11.2% after releasing its financial results for the six months ended 30 September 2022. The company confirmed that it had started the pilot lending phase of its RewardRate product, as I had mentioned in previous articles since its website was live.
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The lender is also in discussions with potential investors regarding the court-mandated capital raise that will dilute existing shareholders by up to 90% if they do not participate in the upcoming equity fundraise.
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Despite the progress made, investors reacted negatively to Amigo’s earnings results after the lender announced that the final tally of claims was about 25% higher than expected after the 26 November 2022 deadline for submitting claims lapsed on Saturday.
The initial adverse reaction was later reversed as investors read the details of the earnings results, which showed that the company was on track to meet all the conditions set out in the Scheme of Arrangement approved by the High court in May 2022.
Amigo confirmed that it resumed lending activities in October 2022 via a pilot program through its RewardRate brand, the new brand under which it will be conducting its lending activities to shed its old image.
The lender gave more details of its capital raise, which requires it to issue 19 new shares for every existing share; hence, the massive dilution. The capital raise must be conducted by 26 May 2023 in line with the High court’s instructions.
Amigo’s net loan book shrunk 64% to £80.6 million versus the £224.1 million it had in a similar period last year. The lender’s revenues also fell 72% to £15.8 million compared to last year’s £56.5 million as it continued running off its legacy loan book without any new lending.
The company’s provision for the looming complaints fell 44.4% to £191.4 million versus the £344.3 million provision in a similar period last year. However, the amount increased from the £179.8 million full-year provision after the company noted the surge in complaints.
Amigo reported a pretax loss of £12.7 million, which triggered the initial decline.
*This is not investment advice.
Amigo share price.
The Amigo share price plunged 11.22% to trade at 4.35p, falling from Monday’s closing price of 4.90p.
