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(Alliance News) - Amigo Holdings PLC said on Thursday its trading subsidiary Amigo Loans Ltd will stop lending immediately and is shutting down.
The mid-cost credit provider, based in Bournemouth, England, said the wind-down of the business will last for around 12 months, during which the existing loan book will continue to be collected.
Amigo Holdings said it made the "difficult" decision after concluding that a new scheme of arrangement, followed by a lower capital rise, is "highly unlikely". This would mean the significant associated costs would cause "avoidable detriment" to its scheme creditors in the event the new scheme and capital raise are unsuccessful.
Amigo's scheme of arrangement was sanctioned by the High Court in May last year, which was conditional on the completion of a 19:1 capital raise by May 26, 2023, as well as a contribution of GBP15 million to the scheme fund for creditor redress.
Following the announcement issued earlier this month that the company had not received sufficient interest from potential equity investors to cover the total £45m equity capital required, Amigo said the scheme of arrangement would switch to the fallback solution of a wind-down.
Chief Executive Officer Danny Malone said: "This is a very sad day for all our employees who have worked extremely hard to address historic lending issues and rebuild a new Amigo, and for our shareholders and wider stakeholders who have supported us. It's also a sad day for creditors due redress who will now receive a lower level of cash compensation than they would, had the new business conditions been satisfied."
Amigo Holdings shares were down by 81% at 0.34 pence in London on Thursday morning.
By Sabrina Penty; Alliance News reporter
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