The Amigo Holdings PLC (LON: AMGO) share price soared 161.5% after revealing that it had signed an exclusivity agreement with Michael Fleming, a financier and shareholder, seeking to find and complete a debt investment into the lender.
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Investors cheered the news that, provides a ray of hope that Amigo’s business could be saved. However, the company warned that the possibility of the business being salvaged as a going concern was slim despite engaging with Michael Fleming.
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The guarantor lender is currently disposing of its assets after commencing an orderly wind-down of its business in March after failing to raise the £45 million needed to continue operating and fund its RewardRate lending programme.
Amigo has entered an exclusivity period with Michael Fleming that is expected to expire on 6 September 2023. Most investors hope Fleming will secure the funds needed to revive Amigo Loans, but the road ahead is challenging.
Fleming must get regulatory approval for any funding deal he comes up with. There is no guarantee that the UK’s Financial Conduct Authority (FCA) shall approve any new deal that seeks to stop the orderly wind-down process.
Amigo management team acknowledged significant impediments to raising fresh capital for the business since the funders would have to establish an entirely new business and receive approval from the FCA while still compensating the affected creditors.
Therefore, the company’s board said there is a very low likelihood of a successful conclusion to any discussions arising because of this Agreement. However, the company is still pursuing the Agreement in line with its duties under the Companies Act to consider the interests of all stakeholders, including shareholders, creditors and employees.
Meanwhile, investor optimism about a potential deal remains high, given today’s rally in Amigo’s share price. However, whether the discussions shall yield a different outcome for Amigo Loans remains to be seen.
*This is not investment advice.
Amigo share price.
The Amigo share price soared 161.54% to trade at 0.85p, from Thursday’s closing price of 0.33p.
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