RE: Doing well after v bad RNS21 Dec 2020 17:10
From my perspective I think the company is doing the right thing trying it. GJ said at Q1 they were going to try this. Try being the word. There was discussion about stakeholders v shareholders earlier. The stakeholder point is the correct word.
At the moment the company is stuck, not lending, not many prospects ahead.
In order for the SOA to work it needs to be voted by the stakeholders, stakeholders = shareholders but more importantly customers who may have recourse on a claim. The "unknown number" otherwise they would have calculated and wrapped this up.
This is a key point to others who are saying this is a done deal with the FCA, technically the FCA have no mandate to block this or make it happen. It has to be voted by the stakeholders at over 75% approval and ratified by a court. Obviously the company will want FCA approval as this helps them validate it. I suspect with no FCA approval the company may abandon the scheme.
Therefore we need to understand more about how the company is going to sell this to the creditors i.e. the folks with a claim, note I also think you can throw in the bondholders too as creditors, so not just the customers. The FCA will want to see their plan too. So expect a series of RNS in the coming days weeks.
Voting obviously has to be fair, you have 2 sets of customers, loan recipients and guarantors so this will need to be factored in. These people will need some convincing, the company is going to obviously have to explain why this is the right thing to do, I suspect they will say that if it doesn't they will go bust. So high stakes for those who like a gamble.
If they can get this over the line then yes the share will fly. The one good thing on this is they have a good team to try this and they also have a huge share scheme incentive to pull it off. Akin to high risk high reward. For those who question why they are putting their reputations on the line.
To someone else point earlier no lender has managed to pull off a SOA and continue lending for new business. however there is always room for the 1st and these are unprecedented times. The BOd may have other plans up their sleeve by trying to do this in order to tap govt money also.
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