(Alliance News) - Shares in failed consumer lender Amigo Holdings PLC were suspended from trading in London on Tuesday, as it said it is in discussions with Craven House Capital PLC for a deal that would preserve some, but not much, value for investors.
Bournemouth, England-based Amigo had provided guarantor loans, and later unsecured loans, to people who couldn't borrow from other lenders due to their credit histories. It currently is in the process of winding down the lending business under a scheme of arrangement overseen by the UK Financial Conduct Authority, after Amigo was required to make millions of pounds in customer redress payments.
On Tuesday, Amigo said this wind down continues. After an "extensive search" for new finance for the lending business, it determined this is "effectively not possible".
Instead Amigo has entered an exclusivity agreement with Craven House Capital "and others", running until December 14. During this period, the two sides will discuss the idea of Amigo buying four businesses from Craven House that are in different fields from lending. This would be in exchange for new shares in Amigo. Craven House also would subscribe for new Amigo shares to invest at least GBP5 million.
Existing Amigo shareholders would be "significantly diluted" by the deal, the company said, but would at least retain "some small value".
The "early stage businesses" that would be acquired by Amigo are music streaming service One Bas.com, digital magazine platform Magazinos, film streaming service TV Zinos, and payments provider Payzinos.
Craven House separately said the businesses are part of investee companies Garimon Ltd and Honeydog Ltd, in both of which it holds a 29.9% stake. It said the purchase of the assets of Garimon and Honeydog would result in a reverse takeover of Amigo, with the enlarged group being listed on the London Main Market.
Amigo Chief Executive Officer Danny Malone said: "Over the past few months, we have remained open to investment opportunities that would allow the business to restart, but have always said the likelihood of success to be very low. Unfortunately, that has been the case. The proposed transactions offer a solution that, if complete, would deliver some small value to shareholders which wouldn't be possible otherwise."
By Tom Waite, Alliance News editor
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Craven House Capital (CRV)
Amigo (AMGO)