(Sharecast News) - Amigo Holdings said it was not planning a share buyback as it sought to cast doubt on its founder's plan to buy a controlling stake if he is installed as chief executive.
On Friday James Benamor published details of an "irrevocable" contract his Richmond Group company had signed with a stockbroker to buy 29% of the troubled lender's shares at a price of up to 20p a share. The instruction will be triggered if Benamor is reinstated as Amigo's CEO.
Benamor's move is the latest twist in a long-running battle between him and the subprime lender he founded in 2005. He has accused the board of committing "slow-motion suicide" in their response to rising customer complaints and a regulatory crackdown. The company has accused Benamor of wasting time and money on his efforts to regain influence.
Amigo is preparing to call a general meeting, as requested by Richmond, to vote on a series of motions including to make Benamor CEO of the company. The board has asked shareholders to vote against all Richmond's resolutions.
In a response to Benamor's social media post, Amigo said the planned share purchase depended on Benamor becoming CEO, not a director. Amigo also said Benamor would require board and Financial Conduct Authority approval to become CEO if his resolution is passed and that this was not guaranteed.
Richmond will also require FCA approval to buy more than 20% of Amigo's shares and going ahead with the planned purchase of 29% would be a criminal offence, Amigo said.
Amigo also rejected Benamor's suggestion that it was planning a share buyback. It said there were no current plans to buy the company's own shares and that a resolution for its annual general meeting authorising buybacks was standard practice.
Benamor said the company was highlighting the risk of him not being approved by the FCA unnecessarily to "manipulate shareholder sentiment".
"Our irrevocable purchase contract is conditional on me being approved as CEO by the FCA. We've been clear about that," Benamor said on social media. "I will not take up that position unless I am approved as CEO and as a shareholder. We do not foresee a problem with that as I have been both before."
Amigo, which makes loans to people with poor credit histories guaranteed by family or friends, has been hit by a surge in customer complaints and is being investigated by the FCA. It abandoned a plan to sell itself in June and said the cost of clearing a backlog of grievances would be at least £35m. In August the company said it had enough liquidity to survive as first-quarter profit plunged.
Benamor has said he wants to become group CEO to lead international expansion and for current boss Glen Crawford to stay on to run the UK business. Crawford has said he will not work with Benamor.
Amigo shares fell 0.4% to 12.65p at 09:42 BST. The company's shares have lost more than 80% of their value in the past year.
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