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27 July, 2020 | 10:34AM
Amigo Holdings PLC on Monday said it has agreed an extension of the securitisation facility performance trigger waiver period with its bank to allow both parties to finalise more amendments.
The waiver period has been extended to August 14 from July 24, after originally being announced on May 27.
During the extension period, performance triggers relating to the securitisation facility will continue to be suspended. The securitisation will move into gradual amortisation from 14 August 2020 if further amendments are not agreed prior to that date, the troubled guarantor loans provider said.
This comes after Amigo Holdings put itself up for sale back in January, but ended this following the withdrawal of potential acquirer. In April its majority owner, Richmond Group Ltd's James Benamor, called for the lender's entire board to be ousted after saying the company is "committing slow motion suicide", but shareholders rejected Benamor's resolutions.
Amigo and Benamor settled their dispute in June, with Benamor deciding to sell his entire 61% stake in the company.
Amigo Holdings had more than GBP135 million in cash on June 30, enough to continue to fund operations and support its customers, the company said.
Amigo Holdings shares were down 2.2% at 7.82 pence each in London on Monday morning.
Amigo floated in June 2018 at a price of 275 pence, giving a market capitalisation of GBP1.31 billion. Since then the stock has plummeted, reducing the company's market capitalisation to GBP37.2 million.
https://www.morningstar.co.uk/uk/news/AN_1595842454005166900/amigo-agrees-extension-of-lending-facility-waiver-period-with-bank.aspx
It’s Glen adding to his holding last week that gives me the most confidence! There are other things you could pick on to give confidence but that’s the key one for me. Being the old ceo he knows the business inside out. He knows what they’ve done in the past and is aware of any area they may have fell short, in addition he was brought in to consult on the sale of the business before now agreeing to retake the position of ceo.
We know that the mysterious buyer approached JB directly and JB refused to sell any shares to them. Both JB and GC know full well there is still a buyer waiting in the wings imo.
We are coming to the end of this destructive selling pressure, as we had through next week we will likely see the Buying take pressure to hold on share price start to move up towards high teens/low 20s
Good morning Mark,
The calm before the storm...
JB is happy with Glen that is clear to all. At the time he was dissatised (to put it polite) with the old BOD, Glen as you state rightly was a Consultant for a short period before being appointed CEO again.
In hindsight a better appoinment due to legal and amigo background and dealing with FCA/FOS. Again that is clear to all.
Sp shot to 18p momentarily on this new CEO appointment /figgin news alone. That is solid.
Due to 1% sell pressure and delay on facilty news by 3 weeks, we are at 8/9p.
These 2 factors have played their part and the market knows this honeymoon is about to finish.
Ref Qtr 1 results
Amigo stopped lending, which has increased cash pile to grow
42,000 customers as part of covid were given payment holiday, this is now over. Like the rest of UK.
Lending to key workers only, was part of their covid 19 prudent lending strategy. 10m people form part of this group.
You share price targets are not off, it’s due to the 3 week delay and selling pressure it was stagnant.
Double figures first, then the re-rate will start to kick in with strings of expected news updates.
Director buys will kick off a frenzy this week.
Exciting 2/3 weeks ahead.
FigTreeHarry - Covid payment holidays are not over. Customers can ask for a payment holiday until 31 October and then they run for up to three months. So they won’t be done and dusted until end of January at the earliest (depending on whether FCA announces further measures):
https://www.fca.org.uk/consumers/coronavirus-information-personal-loans-credit-cards-overdrafts
Shezer, it can be done twice (so far)
I think Amigo has a dilemma here - technically it can charge “reasonable interest” during the payment holiday. But if you’ve got a balance of several thousand accruing interest at 49.9% for six months, charges will be quite big. Should Amigo enforce the full amount of additional interest? Is there an opportunity for Amigo to get some good PR here?
Yes, why not give away more concessions voluntarily and bankrupt the company. Help the FCA with its agenda lol
Jimmyg56 - average interest is lower, it's advertised as "representative 49.99% apr", some customers are charged less.
Also I don't agree with your idea of advocating interest reduction on shareholders behalf - we have huge complains bill pending (£126m costs so far) and mounting defaults (£110m provision, might get higher), there's financing issue solution too (RNS is due) - if they don't reach agreement then money will have to come from somewhere (and interest on this debt will be inflated by situation amgo is in and economic environment), even though we do have closely sufficient near-cash reserves - it will deflate potential lending principal (working capital).
Fair enough Yuri. Was just thinking out loud.
I wasn’t suggesting reducing the amount of interest already owing as set out in the loan agreement. Just musing whether there’s a PR opportunity (and win points with FCA) to waive even some of the extra interest that has accrued during Covid holiday. Especially if reality is that many of these customers won’t be able to pay it anyway - so might not actually cost that much. Amigo still gets every penny of what’s in the loan contract. They just don’t charge any extra that comes from Covid.
loans are just extended so will just take 3 months longer to make the final payment, using amigos headline rates on their website it would work out at a cost of ~£21 a month per £1000, for 3 months in interest, so £63 interest for every £1000 to the customer.
A total of £15m on the £700m loan book if everyone took the payment holiday, and this interest free period would have a net cost to amigo of £285k for the 3 months based on the 7.625% bonds.
So a clear answer on how they will deal with it, take the <£300k hit.
Allthatguff - I don’t think my idea is supporting FCA agenda. They’re focused on whether decision to lend was right in first place. This is about showing Amigo is an understanding lender when unforeseeable issues arise, without sacrificing a penny of what’s owing under the loan agreement. I think it would undermine any sense that Amigo is unscrupulous.
But fair enough, it’s obviously not a winner for you guys. Just putting an idea out there.
Itisagame, I don’t think that’s right. It depends how long is left on the loan because the missed payments will accrue interest for as long as it takes to make them.
So if you’ve only got six months left on your loan, the missed payments will accrue interest for six months until you make them. If you’ve still got 3 years left until the end of your loan, the missed payments will accrue interest for three years until you make them.
So by the time you get to the end of your loan, it could take much longer than three months to make the missed payments PLUS the interest on them. And payment holidays can be for as much as SIX months, so the problem will be way worse for some customers.
It is a game - unless you know something I don’t about how Amigo is planning to claw back the missed Covid payments. If Amigo is doing what you’ve described, that soundS very much like what I suggested - with no additional interest charged on missed COvid payments - they just get tagged onto the end.
Its not going to be completely right but the actual cost to the company for the interest is bugger all in the scheme of things on their capital, it will probably end up costing more in admin and will defiantly have the potential to cost them more in legal fees if they still charged the interest over the period.
At the end of the day Amigo has what £300-£400m from Bonds that are costing amigo interest, the rest of their pile is made up of cash raised by shareholders and profits which has a zero maintenance cost to amigo now the div has been suspended.
Its much easier and cheaper in the long run to say to the customer - you have "X" payments to repay which comes to a total of "£Y", at the end of this holiday you will still have "X" payments to pay which comes to a total "£Y".
Y + interest over the holiday period makes it to complicated for the customer base and would create more issues, when you are having court battles over the fact that the customer doesnt understand the role of a guarantor or that the money they receive is not actually free and needs to be repaid its pretty obvious that they would not understand extra fees and interest added to their loan.
Im sure a court would take the customer side against amigos with their promise of "We hate fees as much as the next person, that’s why we don’t charge any. That’s right - no fees whatsoever!" the extra interest could be used as an attempt to charge fees, mis-sold the customer, and whatever other excuse the CMC / FCA / lawyers would like to insinuate.
and i didnt know they made it 6 months, thought it was 3.
What you said is what i would expect from them Jimmy, it keeps the whole issue easy and simple and at little cost to amigo.
Itsagame. It is 3 months that was laid down by the chancellor but they encouraged lenders to show “forbearance” and most are asking people if they would like to apply for a further 3 months. However first payment holiday should have no bearing on credit file, the second one (extension) hasn’t been given the same status.
As I understand it, neither the first or second three month payment holiday should leave a negative marker on a customer’s credit file.
And the payment holidays have nothing to do with the chancellor or government. They’re required by the regulator. That means its the firms that bear any costs and not the government.
Jimmy my son works for RBS it’s not funded by the government but it was upon their instruction
"Itisagame, I don’t think that’s right. It depends how long is left on the loan because the missed payments will accrue interest for as long as it takes to make them."
Amigo "cap" interest on whatever's in the original agreement. So you don't pay more, even if payments are late. (unless you then then try and pay-off early, in which case you could end up paying "extra" interest.
"That’s because our interest is ‘capped’. If anything does cause the interest to accrue faster, such as late payments or date changes, then the interest will stop once it hits the amount you agreed to when the loan was paid out. You won’t have to pay back any more in the long run."
"Jimmyg56 - average interest is lower, it's advertised as "representative 49.99% apr", some customers are charged less."
Very, very few loans are less than 49.9%. They only started testing multiple price points in Q3
Thanks Robespierree, that’s good to know.
The reason I assumed it worked that way is because I saw someone on debt camel saying they adjusted their scheduled repayment date back by a few days (with Amigo’s agreement) and they ended up paying two or three extra monthly payments at the end (more than was in loan agreement) because a lot of interest had accrued on the deferred amount.
It is interesting the mortgage repayment holidays with the banks over the covid period still accumulated interest.
Mark1973, sorry maybe crossed wires. I am involved in the sector too. As I understand it, the government is involved in mortgage payment holidays and its supporting the banks on this through business loans. The Treasury has issued statements about mortgage breaks.
The consumer credit payment holidays (personal loans, credit cards, car finance etc) are not government backed. That’s not to say there hasn’t been some arm twisting from Treadury of course. But I’ve only seen FCA announcements not government ones. The lender trade bodies have been campaigning about lack of support for non bank lenders who are giving holidays.
https://www.finextra.com/pressarticle/82426/urgent-government-action-needed-to-bail-out-non-bank-lenders---fla
GreatCrestedNewt - yes. There’s nothing in the FCA guidelines that says interest can’t continue to be charged, in fact it clearly says it can.
As I understand it, it would only be a lender’s choice (or because it’s already made the kind of promise Robespierree explained) that would prevent it. Hence my post earlier.
Fair enough Jimmy. Will just have to wait and see what the coming week brings in terms of updates.