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shareholders have already borne a reduction in their book value of £85m plus the remaining provision of £151M, all that has hit shareholder equity i.e losses to equity. What do you not understand about that? You are like the FCA legal counsel, clueless on the financials
What you are saying is FACTUALLY wrong. Amigo can make all the provisions they like but when they inform the borrower than a loan balance will be reduced this needs secured bondholder approval as they have a fixed charge on the loans and a floating charge on cash. Reducing the loan balance reduces the secured bondholder security which they have to give permission on. That is the one of the purposes of the fixed charge, nothing happens without their permission. This is not going to happen now or at any future point until the £234M is repaid. Making a provision doesn't require this approval, using the provision does.
The claimants were offered and accepted compensation conservatively valued at over £230M with £80 odd paid. the FCA basically said 10% was not enough based on the £15M cash and ignored the balance adjustments and the future profits. This was factually wrong and self serving. I think claimants would have a case as it was a change of stance by senior management that resulted in the objection. Their arguments were plain wrong, the claimants shouldn't suffer because they didn't understand how Amigo is financed. They are Amigo's regulator after all so that would be a really stupid argument. If this goes badly they are target number one and deserve to be.
If I were a claimant I would put a value of say of say £50M from 4 years profits and go after the FCA for £215M plus costs. That's a nice position for Claimants as all they have to do is show the FCA played roulette with the compensation offered by Amigo and approved by claimants. FCA are in a very dangerous place and they only have the "senior management" to blame as the case handlers had agreed a different approach. The FCA regulating Amigo and now playing games for claimants is a huge conflict. Dumb, very dumb
The moratorium is not a support to anyone. If the moratorium was lifted tomorrow the Board could not continue to make payments to claimants as they don't have the cash. They could make loan adjustments if the secured creditors agree which I doubt they will now. So the FCAs intervention has lost claimants access to the still remaining £151M, the £15m cash and whatever cash comes from future profits. It has done nothing positive for shareholders and put the secured creditors on heightened alert to agree to nothing that diminishes their already very tight capacity to get repaid in full. The FCA has done nothing positive for claimants, at the moment they are down £165M (150+15, lets assume no value from future profits). If the FCA were to allow claims to be made, as a secured creditor I would try and find a way to take control with Administrators appointed by me. I would grab the cash, fire most employees leaving a small team to help get cash from the remaining loans. I would offer big discounts on the loans to any borrower repaying the loan within 21 days. The remaining loan book at £300M or so and if I grabbed £150M of the cash would mean I needed £85m or so from that book. I would offer 50% discounts for immediate repayment to end this as quickly as possible. You are in dream land if you think FCA has done the claimants or shareholders a favour. The only favour was to rattle the cage of the secured. They have been idiotic and my hope is claimants come after them for the lost compensation because if this goes the two main actors are to blame, Amigo and FCA. As Amigo will have nothing I would go after the FCA.
First, NOBODY who knows the markets uses EBITDA to value a finance co, its ludicrous as you are not accounting for cost of goods sold, interest. Dream on if you think Amigo a fin tech, not in a million years. Its a few steps away from a door step lender. Just look at the valuation of the SX7e
Since the financial crisis, lending entities dont have high valuations at all, they struggle to even trade at BV and 7-8 earnings. The S&P trades at 18x and some technology companies at 10x SALES. Unsecured borrowing for Amigo wont be realistic for a very very long time, I doubt ever. The smart money knows the FCA hates the sector
Yes, but only on a secured basis, so the cash from these new loans would go to those secured lenders not to fill holes from previous financing. Amigo wont get any unsecured debt with its track record of that I am 100% sure
It is true that there is no restriction "in the security" i.e the floating charge allowing management to use the cash. There was one piece of other evidence though, the cashflow schedule presented by Amigo's board. This shows that after allowing for £15m of upfront cash the Board believes they will just make it to repaying the Bond in Jan 2024. No other cashflow schedule was presented by anyone else and its simple maths that if you spend more now on a new process then you will have less in Jan 2024. That's where the problem is, can the Board spend more now if they believe they will be short. I would say no, because they have a duty to these stakeholders too. They cant really argue now they didnt know they would be short because if in Jan 2024 they are short as a secured lender I would sue them and say they knew they would be short and use their own cashflow schedule against. I would also sue the FCA as well for probagating this idea and here again I would present a transcript of the hearing as evidence. The Board are now trapped by their own evidence. Doing something they know will leave a shortfall might make them personally liable and negate any Board insurance cover they have
prolee, thats not necessarily true. It might just be non payment allowing exercising their security. At the moment thats my best guess as they haven't done anything. That means only Jan 15 2022,2023 and 2024 are the dates when they can take control if payment not made. Given the £165M cash thats not relevant and they are not lkely to object to a payment to themselves
The issue in a nutshell is you have the securitisation lenders leaving. They are getting all cashflows from their loans in return for their waiver on the performance triggers. That means the securitisation pool isn't paying any operating expenses at all, salaries, rent, BOD, legal fees, court fees......All these expenses are being borne essentially by the secured stg bond holders. That would irritate me, knowing I'm paying for running the shop and management employing advisors & lawyers with the farce we all witnessed and the prospect of more of this comedy show. At a minimum I would want more security over the cash and how it is spent. However they can only do what their document allows but if they get an opportunity they will definitely zero down on that cash. That is the risk, if they restrict the cash movement it turns Amigo in to a zombie until Jan 2024 .
They cant sell the loan book there is a fixed charge on that, its only the cash has a floating and thats typical as you have to allow the cash to move on a daily basis and you cant keep getting permission. What's not typical is the size of the cash balance in this case and that is where the secured will be concerned about waiting
My advise would be to write to the Board and tell them you want the 15% of profits to be in place until valid claims are met by balance adjustments or cash payments as appropriate. That's it and if Court or FCA are not happy with that they can deal with the claimants for their losses. That should be the final offer and if its perceived as a Damocles sword so be it. Enough time and money has been wasted. The Board dont have the bottle for this approach but they work for shareholders so if there is a majority they have to act on that instruction, otherwise they will ignore you, they are good at that.
Timing is everything, a share issue at 10p and one at £1 are 2 totally different things. Plus if things gets settled 49.99% on the net loan book produces a lot of internal cash. For a period they should just use internally generated cash to fund new lending
Its a daft idea for technical reasons and because who says FCA will be happy with £10-15-40-50m -£100m extra cash. Why are they so concerned with cash. If I borrowed £100 and only had to repay £50 I'm not sure I would see much of a difference. As this saga is littered with village idiots, keep it simple. Make the profit contribution timeline until all valid claims are settled. Nice and easy and even the smallest brain can understand that. If the FCA objuct again, just let it go and sit back as all claimants go after the FCA for £250M which they will and the FCA will loose. Stupidity isn't a valid defence in court.
and remember the minute the cash from a share issue by Amigo comes in to Amigo, which it must, it belongs to the secured creditors not the unsecured claimants. The share issue is stupid. I, for one, wouldn't buy shares knowing it has a floating charge in favour of secured debt holders . Nobody will a basic level of understanding would