The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I have to say the whole argument of 10p in the £ isn’t right… the offer was £15m and 15% of profits for 4 years.
The principle of an SOA is for the fact they can’t pay full compensation back… a dilution is fine and expected but some of your values and principles are excessively skewed to one view Jimmy… very similar to a certain website. Even if they wiped out shareholders all together today it would only create the same value for you… would you be happy with that then and a company that nobody would be interested in investing in with an FCA treating shareholders like that…
Ultimately many companies that offer sub prime lending are exiting the market I would expect the FCA to be very careful what they do with Amigo because one thing for sure is the main stream finance companies won’t touch sub prime and if that is the case where do they go then!
I agree with you maverick but just to be clear they never gave a letter of non objection... they always stated that they don't approve of the SOA but would not object at court... until 1 week before the court date they changed their approach...
for me this just proves that they aren't proactive
I like this part...
His committee has suggested that the FCA needed set a clear date for completing changes that would move the culture on so the FCA is a more proactive and agile regulator.
If the FCA was proactive we wouldn't have wasted 6 months on the original SOA... they should be proactive and engaging with Amigo and certainly didn't feel this was the case in SOA 1.
Prolee... at least you are consistent spreading doom 157 posts in Amigo in the last 30 days I must admit it feels like more but at least you spread the love of doom in MBO, RMS, IQAI and BRH... can't see a positive post you have put up in 30 days you should try it you might like it :)
Pantz I don't see many people buying into a RI unless amigo2.0 is part of it... without Amigo 2.0 there is no future to the business to buy into other than paying claimants... this is what dicker said at court and was absolutely right in my eyes.
Franky, In regards to your point about the madness of the FCA and that they will say £40m up front so wipeout the shareholders which is what they said at court... My only side of comfort on this is that that really sets a poor precedent for any Financial Services firm that they could run the risk of having shareholders wiped out... makes investing in FS firms less palatable for all investors IIs and PIs... I expect some form of dilution and am comfortable with a fair dilution... 50% is too much for me and id be out as soon as possible 25% is fair... an SOA is their to cap redress and to be fair the FCA must consider the precedent they will set.
Jimmy that is one strange post...
Reading this part of your message is very odd...
“But yes, I think I’d need convincing why shareholders shouldn’t bear the same losses as creditors in order to ensure Amigo survives, given they’re below creditors in insolvency?
Shareholders seemed to think creditors taking a 90% haircut was ok. Why shouldn’t their stake in the company be written down by the same amount as they expect creditors to lose? That way, everyone is in the same boat and has an interest in minimising haircuts all round.”
After I have read that I totally understand why people assume you are DC
Okehurst that's exactly what I would say the judge would have all the facts to make the decision... that's why he has established that there isn't a burning platform... there will be in time if an SOA is not sourced and approved that is why the judge said he understands why the BOD proceeded with an SOA and the FCA don't dispute it either, all they are saying is it needs to be fair!
what the hell are you smoking... yes I did post that and stand by what I said I'm pretty sure my comment to you doesn't contradict it...
My comment was more about I would take what the judge says about our financial position and I assume he has been able to look at the structure of Amigo to understand how the money can be used hence his ruling... I said I would take what the judge has put over someone saying bond holders can do what they want this that and the other without any confirmation of why...
So for clarity I do think shareholders have taken a burden, I think the FCA painted a picture that presented the view they wanted... I am realistic and think we will take a hit going forward... but to move forward helps all parties, Bondholders, Creditors and Shareholders... SOA is the solution and the FCA and judge agree its the solution they just want it to be fair.
Prolee... you seem intent on picking up on individuals which gets boring... I'm all for having a balance in discussions and I approach amigo with a balance there is certainly risk.... although I would much rather use text taken from the judge to support the rationale behind his decision than someone just saying yeah but bond holders can do this, that or the other with no confirmation of why...
I am assuming but the Judge must have been able to look at the structure of Amigo and its financing to make his decision hence the outcome that we have got...
Gosia, that has been one of the better posts today thank you.
I totally agree with your comments and like the CMC idea... ultimately until a company does what you say they will continue to do it and get away with it due to the complaints era we are in
first thing I would say is this part is rubbish:
"Amigo on the other hand borrows money at c 8pc and lends it back at c50pc-that leaves 42pc in between to cover those teething costs you mention-the same costs other banks incur."
same costs other banks incur... nope they don't because they don't lend to sub prime... and the reason being is its higher risk of default, which increases its costs etc
Truthfactory all I would say is somebody with a higher credit score have it for a reason, sometimes not necessarily their fault but that can't be the case 100% of the time... if you believe the world is a wash with money and expect sub prime lending at 10% its never going to happen... even credit unions lend at 40+%
Jimmy... that then goes back to the issue that the FCA wouldn't discuss Amigo 2.0 until after the SOA, you can't do a RI if there is no future business... who in their right mind would buy into it which then generates the cash?
Id have no issue if it came out that this is the SOA and we have agreement to start amigo 2.0 and as part of this we will do a RI which contributes to both SOA and 2.0... but that's not what the FCA was willing to do... basically willing to hold all the cards give no direction and sit back wait until the 11th hour and then object... that's poor regulation to me... they should engage, provide guidance for a fair outcome.
Jimmy, I know a lot say you are Sarah and all that and ill be honest I'm not bothered and in some ways it would be good that you are... the point raised of shareholder gain is an interesting one...
The FCA used the increase from 6p in Jan to 29.5p in May and said its the highest rise on the market... but lets all be clear 6p is based on the fact of insolvency was/is close (even now it is the bondholders hold the best cards) the FCA never once mentioned the reduction in price from when the complaints issue was first mentioned about £1.40ish to the 6p now that is a bigger loss... does that not show shareholders have already taken the burden?
My other concern is they talk about dilution/RI... now at 29p a RI would have been possible using the £140m market cap the FCA used in court... today the market cap isn't even £47m so to raise enough funds as part of a RI to cover or contribute to the pot for the complaints isn't realistic... even if they utilise the wipeout shareholders quote and give to creditors...
what long term future does the business have?
who would invest in the future?
what standard does that set for all financial firms?
A RI should be based on the future of the business yet they won't discuss Amigo 2.0 until the SOA is agreed?
The FCA does have a responsibility to shareholders as it does to consumers as well... a fair deal I agree with... I just think the way the FCA have dealt with this has actually caused more harm than any good they say they don't negotiate but they should give guidance as to what they are looking for and a fair proportionate approach should be taken.
Prolee Just out of interest... what is the solution... who will provide finance to the people with poor credit ratings?
Credit unions charge 42% compared to Amigo at 49.9% I assume you will want them shut down as well...
I don't dispute lending should be fair... however a person that has missed payments or defaulted and has a poor credit rating will never be able to borrow at the same rate as somebody that has never missed a payment and their credit score is great... This is called risk based lending - hence mainstream banks are not interested in it.
Hunniford...
Wasn't aimed at you personally and I'm happy to apologise if it came across as though I did... certainly wasn't my intention.
My point was aimed at the issue of sites particularly DC (by the way she actually controls what goes on her page)... where they can post anything they want and influence others...
The example that was given on dc which as you state is an anti Amigo site saying that when a customer rang Amigo they state they know they are breaking FCA rules by not dealing with redress payments... (how true is it that a customer actually rang amigo? did amigo really say that? this is the issue its people peddling information which could be right but could be wrong)
The point I made was that when reading the Judges decision and commentary he stated that the agreement to postpone payments for redress is still in place... so Amigo aren't breaking any rules. that was in the judges notes 132 from memory.
This is the problem with random people stating rubbish with no credible evidence...
I have just got off the phone to the judge and he said...
As already explained, if this particular Scheme is not passed and approved, the informal moratorium on payments to Redress Creditors will continue and this will give a breathing space for the directors to explore further restructuring proposals.
Ok I just read the Judges notes 132 which said it... don’t really have the judges mobile ;)