The Amigo Holdings PLC (LON: AMGO) share price fell after admitting that it will most likely be unable to raise the £45 million mandated by the Scheme of Arrangement sanctioned by the UK High Court. The company admitted that talks with potential investors had only secured funding worth £21 million.
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However, there is still hope that Amigo may avoid winding down its business operations after it unveiled a new plan to eliminate the £15 million capital commitment to Scheme creditors and to reduce its working capital requirements by up to £3 million, hence, reducing the amount needed to £15 million from the current £45 million.
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If Amigo can get the High court to approve the new scheme, it would reduce its shortfall from £24 million to just £6 million, which it would have to raise from existing or new investors. The situation does not look pretty, given the fast approaching 26 March 2023 deadline.
Luckily for the scheme creditors, the guarantor lender confirmed the £97 million committed to the Scheme would not be affected. The scheme creditors would still have access to the amount, which would be shared pro rata based on their adjudicated claims.
The High Court and Amigo’s creditors would still have to approve the new scheme once the company’s board presents it. There is no guarantee that the creditors and the High Court will give the go-ahead on the new scheme.
Amigo confirmed that it was in talks with the UK’s Financial Conduct Authority (FCA) about the best way forward and would communicate its next steps soon.
Amigo’s CEO, Danny Malone, said: “The Board is very conscious of its duties to its shareholders and wider stakeholders, including Scheme creditors. As we assess the viability of a new scheme, our minds remain focused on a go-forward solution for the Company where existing shareholders retain some value but where Scheme creditors can benefit beyond the Fallback Solution. This is a very challenging situation, and the Board may conclude that another new scheme is not feasible, but we believe it is important to explore fully and swiftly before reaching a conclusion.”
*This is not investment advice.
Amigo share price.
The Amigo share price fell 2.97% to trade at 1.96p, from Thursday’s closing price of 2.02p.
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