The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Amigo hasn’t lent a penny to a single person since November 2020.
For most people, Amigo hasn’t been an option for credit for nearly two years. It’s another delusion to think the world will fall in if that flow of credit doesn’t start up again.
LTHcine - “For a start, no price has been given that they will raise at.”
Whilst not fixed, the December RNS says “it is hoped to raise a minimum of £70m in new equity”. That’s the best we have.
You also seem to be pinning your hopes on a phoenixing arrangement within the PLC. It’s delusional to think FCA would allow that.
RosieNas, can you shed light on how you arrive at 0.17p per new share?
By my maths, if RI wants to raise £70m (RNS 6 December) from 9 billion shares, each new share will be 0.777p each.
Shareholders will need to buy 19 of them for each existing share, so they’ll need to spend around 15p for each existing share in order to take up their rights.
That figure stays constant irrespective of share price fluctuations. The key driver is how much do Amigo need to raise from their 9,000,000,000 new shares.
At only 0.17p per new share, the RI would only raise £15m. That covers the scheme contribution but not enough for new lending.
And spare a thought for all the customers who are waiting for money Amigo owes them, haven’t had a penny paid for over 12 months, and many of them have had to keep paying loans back that they wouldn’t owe if Amigo had looked at their case. They know, even after a huge wait, at least half of what they’re owed won’t be paid to them.
Hats off to Stevie too for turning a nice post into a creepy pervy one.
HH is right. The chat on here has been based on a c. 0.8p price per new share to raise £70m. Because you have to buy 19 for each existing share, your new shares would cost around 15p for each current share of you take up full rights.
At 5p per share currently, that’s 3x the value of current portfolio, which would reduce if the share price continues to rise.
The 95% dilution will transpire if you don’t take up your rights. But if you do, the cost is likely to be far far less than 19x the value of your current holding.
Stevie - you make my point. The Amigo drama more or less kicked off in March 2020 with James Benamor’s blog. Anyone who bought since then has known Amigo was a massive gamble. Lots of people accept the 1% ISA because they prioritise security. You wanted higher rewards and it came with higher risk. You don’t get insulated from that risk for being salt of the earth.
This scheme is unfair to shareholders. Just as the first scheme was unfair to creditors.
Although I wouldn’t wish losses on anyone, no shareholder in any company is guaranteed to make money. And anybody who has bought shares in the last two years knew this was a huge gamble, with FCA and FOS taking a dim view. I didn’t see very many shareholders protest when creditors were being asked to take a 90% haircut - in fact a great many were cheering and snapped up more shares. So some of the howls of protest now the boot is on the other foot ring hollow.
Sadly, this discussion board has been treated more like an Amigo fan club. Massive groupthink where those of us who have expressed caution told to shut up and go away - which is still happening now.
I hope things get better but if it doesn’t, no shareholder can say they weren’t aware of the risks.
Expru, I don’t know what part of Gary’s Amigo track record is good.
He came in and assured everyone that Amigo had done nothing wrong and would be relending before end of 2020. Then he changed his mind and said the full costs of Amigo’s wrongdoing required a scheme to avoid bankruptcy. Then he personally appointed a new management team that he claimed knew FCA inside out. Then he launched a scheme that FCA opposed in court. Then, after announcing the scheme but before getting it approved, he set himself and his team up with multi million pound LTIPs (comparing to the 90% haircut for creditors). Then he turned up to court utterly unprepared and got a spanking for having misrepresented the position to customers. Then he took six months to come up with a new scheme, which offered between £77m and £97 more than he’d previously insisted in court was the best Amigo could do. Then he announced that he will be diluting shareholders by 95%, baselessly claiming this is a UK market standard (and conveniently glossing over how incompetent it would’ve been to have launched the first scheme without such a standard dilution). Then he loses the CFO he appointed barely a year ago at the very moment the share price hits record lows off the back of a highly controversial RNS.
And your advice is to hold on the fact of Gary’s positive track record and trust in the hope that he knows what he’s doing?
From where I’m sitting, it’s not the FCA or the courts that lack common sense. It’s shareholders who, despite all the clear signs along the way, are still shocked by what goes on at Amigo.
I suppose the one thing that does suggest he’s a genius is that he’s been coining in £50k a month all this time.
Maybe I am Beastly. Why don’t you set out the true picture for us and then we can discuss it?
Chucking semi-witty insults at me might be popular with a lot of cheesed of shareholders with not much else to smile about, but they don’t improve anyone’s understanding of WTF the BOD is up to.
I don’t see any evidence of Danny having experience of working with the city to manage a raise.
I don’t know anything about Danny and wish him well. But it seems an odd choice on the surface. Everyday Loans is part of Non Standard Finance, whose 3 year share price graph looks much like Amigo and who have announced the closure of their guarantor lending arm following an FCA investigation.
Royroy, genuinely sorry to read your story and I hope things turn out better for all shareholders. 95% is not a market standard and is too high.
However, when you bought shares during last court outings, you did so hoping (expecting?) to gain from an arrangement that benefited shareholders by requiring a 90% haircut for GENUINE creditors. As I said at the time, that was never something I would’ve bought into.
As neither a customer nor (any longer) a shareholder, I disagree with both schemes. But this proposal is just a mirror image of the unacceptable proposal so many shareholders were happy to inflict on customers.
Of course I’m not invested! What a question…!
These issues of shareholder / creditor risk and pain are of interest to more than just current holders of Amigo. I ain’t going anywhere. Deal with it.
One thing for shareholders to bear in mind is that Amigo goes to court in less than three weeks to ask the judge to allow creditors to vote. The judge will want to know - after the previous judge found information was not full or accurate - that creditors have very clear information about how the Scheme will work.
The Practice Statement Letter - sent to creditors on 13 December - says that a CONDITION of the scheme is that “Amigo raises at least £70m of finance within 12 months of the Scheme Effective Date from external sources”.
Creditors have already been given this figure and they will be voting on the basis that, if the condition is not met, Amigo will be wound down. If Amigo starts fiddling with the proposal close to or during the vote, I can’t see the judge liking that.
I think the course is now set. How can it be changed before court?
Some further thoughts. The RNS is patently false. The argument that 95% is market standard is not supported by Gary’s letter.
In his letter, I also think Gary overstates the judge’s position about the amount of dilution required by the judge. In this regard, he repeats the lie / inaccuracy of the RNS. The judge said (e.g. paragraph 134):
“It is commonplace in corporate restructurings for the equity holders to be compelled to sacrifice AT LEAST PART of their interests. There was nothing to explain why the directors of the Company were proposing that the shareholders should … retain the whole of their interest in the Group while the Scheme Creditors should accept a 90% haircut. There was no material analysis to explain why … this was in the best interests of the Scheme Creditors”.
The judge did not say Amigo had failed to conform to a 95% standard. It was the contrast between ZERO loss for shareholders and 90% loss for creditors. The judge’s test was whether the balance of losses was IN THE INTERESTS OF SCHEME CREDITORS. It was NOT about whether it inflicts a 95% loss.
But there are questions of honesty, accuracy here and basic competence here. The judge called out Amigo because the information for Scheme 1 was “not sufficiently full or accurate” (paragraph 138). I support the idea that shareholders need to take a haircut. But I resent Gary and team inventing fake “market standards” to justify their CHOICE to inflict a 95% haircut.
I fear Amigo has swung from one extreme to the other. Scheme 1 was excessively harsh and inaccurately explained to creditors, Scheme 2 appears to be excessively harsh and inaccurately explained to shareholders.
On both counts, this shiny new management team has shown terrible judgment and questionable integrity, posing real risks to the firm.