Member Info for Senator1

I am pretty sure on the acceleration of the SF. How it is linked to the Secured Bond is the real killer question. IF and its an IF at the moment, the judge has no real other choice as the Board's advise now has TANGIBLE EVIDENCE and I think any reasonable person will agree that the Secured lenders wont allow the Board to spend their cash on something they don't gain from. It has to be checked and the lawyer charging a couple of grand an hour has to make the point. I have asked Amigo to confirm, that is first step.

I understand from the hearing today that the Judge is really unhappy with the Binary position presented with lack of tangible back up. Why wasn’t the fact that the Securitisation facility has a temporary waiver on the performance triggers which I presume are events of default? If not waived I believe this means the facility goes in to run down and from memory I think the loan balance is about £90m secured on I am sure a loan balance much higher. 1.4/5 times the £90M?

Then the question is what happens with the secured bond. I am guessing there is no cross default, but what about cross acceleration?? and is there a MAC clause??. If you can’t rely on a MAC when one facility is in acceleration, when can you? You can be sure the Secured Bond holders will be reviewing this documentation in detail to see what their options are.

I suspect the temporary waiver is to end June so there is real urgency. If I was a Secured lender and you were suggested to by the court to negotiate again there is no way I would allow you spend any more of my cash. Why wasn’t this made clear to the Court? The FCA gave the impression there is no urgency, no trigger and loads of cash and the real tangible card you had supporting the Boards view on Insolvency was not even mentioned, never mind said over and over and over again.

The ridiculous situation with this whole circus is that the Secured Lenders, given the temporary waiver, are really in control whether the Court likes it or not. The FCA stance was incompetent and you had a real opportunity to show them up for their lack of understanding which you let pass.

I haven’t seen anything other than the extension to June 25th 2021. If I was this lender(s) there is no way I would agree to the Board spending yet more of my secured cash on another merry go round with the FCA or anyone else. I don’t understand why this wasn’t presented over and over again. Does your lawyer understand the way the funding is structured. If my “outside” analysis is right, this is grossly incompetent.

and Bond holders are SECURED

Nope, there is typically cross default, if not cross default, cross acceleration and there is always a so called MAC clause, material adverse change. If you cant use a MAC when one lender is enforcing security then you never can. Im afraid the Secured Lenders are the real decision makers, everyone else is on a gravy train.

there isnt really any money for more negotiation. It is true the cash is charged with a floating charge which allows it to move to keep financing the business but if the Secured lenders tell the Board that if you spend more money on another negotiation we will not be renewing our waiver then the Board know its over and can't agree to starting the negotiation as they cant pay the inevitable fees. I believe the temporary waiver is in the securitisation facility but if that goes in to run down I don't see how the Bond wont allow accelerate as these things are all typically linked so all secured creditors are in same position. So unprofessional of FCA to argue there is no urgency as there is loads of cash. That is incompetent on a grand scale.

I think the fact that the secured debt is in DEFAULT with a temporary waiver (my guess is till the end of June) and reality the cash is charged to them means they wont allow another £15-30M of their money being used for another negotiation of value between shareholders and unsecured creditors. They will have seen the way this played out and I suspect are running out of patience. If the court ordered this, as a secured bondholder, I would not agree to extending my covenant waiver in June and would enforce my security, my fixed and floating charges and appoint MY administrator. So this is what is ridiculous about this whole situation as the real decision makers are the secured lenders (as they should be). Annoy them by proposing to spend their money on something that adds no value to them but reduces their cash and it is definitely over , that is why, in reality, the court has no choice, whether it likes it or not. They are not in the real world if they think the Secured Lenders wont act as they are entitled to when the waiver comes up for renewal. So the reality is the choices are liquidation or the current SOA (as advised by the Board). The FCA are terribly misinformed if they think there is no urgency because there is £180m of cash. That cash doesn't belong to shareholders or the unsecured creditors. It belongs to the real decision makers who have been patient so far but I suspect wont play along with this circus too much longer. Why should they watch their cash get reduced and likely more borrowers decide not to pay because Amigo is in a mess. They will play really hardball and it wont be pretty. Hard to understand why the real reality isn't obvious but I guess all the so called experts don't care as they are on an hourly rate of a couple of grand and so will string it out as long as they can. Money for old rope.

It is not the Courts role to decide whether current is SOA is optimal. That has been guided in previous judgments as a matter of law. They need only decide that it is FAIR and that all parties had all the information they needed to assess that. The argument will center on whether the Board in presenting two alternatives skewed the decision. Is liquidation the only real alternative? I think the fact that the secured debt has a temporary waiver is the killer objective evidence that this is very probable. If the secured creditors call an event of default, this will trigger cross default and de-facto it is in Administration on the secured pool and more generally. Why this point has not been made is very strange. That will kill the argument that liquidation is not the only alternative once and for all. The secured lenders wont wait forever as they know that further delays will weaken their position.

Financial firms don't trade on a multiple of EBITDA for the good reason that their major cost is I, so your suggested valuation multiple & valuation is way off. Its like valuing a corporate at sales minus overheads and forgetting about cost of goods sold. Ridiculous!

Too many uncertainties right now to work that out but maybe 50% of book value a good start.

"In light of the cash contribution to the Scheme and the mechanics of the Scheme, the Company believes all of the complaints provision reported within the Half Year Report would be utilised to cover the costs of settling pre-Scheme complaints including approximately £30 million processed in the quarter ended 31 December 2020, modelled customer balance reductions through set-off, SchemeCo costs and the cash contribution to the Scheme".This is what they said and its clear. Pre-Scheme get the existing provision after the £30m utilised in quarter and the £30M to fund the scheme. New claimants get the £30M in scheme plus 15% for 4 years. Seems right to me that the scheme opportunists that will come out of wood get a defined pool rather than open ended. If FCA/FOS don't agree then existing claimants and new one likely to get nothing so I think it is an easy decesion. If they push it too far they know the secured lenders might say "sod it" we are too busy to negotiate endlessly with civil servants where time means nothing.

The bondholders are secured, why should they weaken their position or economics and do a debt for equity swap. The securitisation debt has a temporary waiver and they get all cash from their pool so they are fine the way they are plus they get any loan taken out of their pool if the borrower submits a claim. The secured bond slightly different but barring unpaid taxes they rank ahead of any claims so they wont agree any changes that weaken their position, why should they? The bondholders not challenging the 15% is generous to claimants. They will probably let 15% go without challenge to save them the hassle of appointing their Administrators where they would get 100% barring unpaid preferred taxes. As to uphold rate, the latest data available from FCA which is to March 2020, the uphold rate is 29.9% down from 42.1% in the previous 6 months.

shareholders will obviously approve if asked so doubt they will be asked. I think it is all creditors and borrowers/guarantors. Think shareholders sit and watch, not even sure they get to vote on the 15% and 4 years.

Can you imagine what would be happening now if JB running things and he had loads of supporters here. It would be over because the secured creditors would not want him in control and so it would be over. If you are looking for a positive right now, that is it. It could have been so much worse, so sp should not go to the low if sense prevails.

its not in his control now. The three Amigos; Court/FCA/FOS decide whether it lives another day or dies. Its that simple, all he can do is play nice and argue it has a place in the market for the good of everyone.

The choice is now clear. The existing provision will cover past claims and the £30M cash contribution to new scheme plus set up costs. New claimants will share this £30m plus 15% of PBT for 4 years. If all creditors don't agree then it is Administration which will be run by secured lenders and nobody after them will get anything. The secured lenders will vote for scheme as they are safe whatever happens and as they have the big bucks owed it will be approved by creditors. Will the FCA/FOS/courts rubber stamp? That is the real question. On the basis that something is better than nothing, probably. This means the future cost is 15% of 4 years pre-tax profits. This is only valuable and would be proposed by management if they believed there was future profits. With the uncertainty the SP will move around but if they get FCA/FOS on board it will rebound very quick. With the new guy on board they have a chance, if it was previous mgmt forget it.

Its a bit difficult for borrowers to make a complaint that they were allowed to borrower an amount of money they couldnt afford if they have repaid it! So while some might try and make some technical complaints, guarantors maybe or top up borrowers, you would hope there isnt a large historic backlog. After all the complaints only really started towards back end of 2019 according to FOS figures. In any event shareholders should know this. Its absolutely ridiculus that hired help can see figures but owners cant. Makes no sense.

On strong foundations it means exactly that. I think Mgmt past and present must be playing a game of definitions. If lots of cases with individual merit requiring the lender to pay the borrower isn’t a systemic problem then I don’t know what is. It shouldn’t be about the same problem. The Lending process is creating Problems therefore to me it’s systemic

The complaints provision and what they used in half year is 44% of the net loan book at end Sept. If they have been lending without systemic failings this must be enough. If there is a fundamental problem with their lending process then its anybodys guess. How can they say on one hand we are not doing anything wrong in our lending processes and then on the other hand be provisioning such large amounts. This needs a sensible answer, the two messages contradict one another. Also if they are lending without process failings a £485M net loan book supported by £100M equity and £159M claims provision does not need more equity. Those 2 numbers are 53% of the net loans. This all boils down to understanding why did they use £53M in the first half to settle claims. What was it about the loans they settled on? What were the terms? Until mgmt explain this and the obvious contradiction between what they say verbally and what the numbers say, everyone is in the dark. Shareholders need to remind mgmt who they work for and it isnt borrowers or the FCA/FOS. Only a fool would support an equity raise without answers to these simple questions..

I SAID if I remembered right as I did it from memory. In any event 30/35/50 or even 60 it matters little

I believe he will do his best to turn it around and he has a chance, mainly because it seems to meet a real need but I also think if he lost £50k it wouldnt change his lifestyle. He has to be seen to put something in, £50k I would have thought would be the minimum that is acceptable.