We would love to hear your thoughts about our site and services, please take our survey here.
Good news. I see the risk of insolvency reduced. Now we have a clearer picture. The securititisation facility will be paid back until Sep. 21, so there will be no one who can file for administration. The fact that BOD is dealing still with FCA is good bcs. they are not obliged to do it. I believe this time it is in the interest of FCA to go along with SOA 2 bcs. if that would fail, there is a great risk for FCA to get sued from creditors for a quarter billion pound for stepping in at the first SOA. Things are not looking great but sky is clearing up. Hopefully they get a non objection letter and anounce the start of relending in the same RNS. Investing in AMGO is like crossing the atlantic on a tree trunk. You know it can´t go under it´s just if you can hold on to it until you reach the shore.
The BOD would not engage with FCA if they would not have the time and money for a SOA 2. From a legal point the BOD would not need to engage with the FCA, because they have a legal right to file for a SOA.
AMGO could commit to a redress payment from the redress provision (159m - 84m paid) in the amount of 70m (35 at the end of 2021 and 35m from 15% pre-tax profit within a maximum of 4 year period and potential final payment, if the 4 year did not provide the 35m). That could be sold to the market as a 100% improvement to the old SOA and involving the shareholders by taking almost double the equity than the current market value of the total company.
Additional AMGO should get the following:
- Letter of approval from counsel of creditors
- Non objection letter from FCA
It is not rocket sience that if FCA is playing again politics, that they are up for a potential lawsuit of creditors in the amount of a quarter billion dollars. Also FOS would get nothing, if the company would go bust. In my world there is only one solution and that is SOA 2.
Here is my view on the two options:
1. Insolvency
- Redress customers getting nothing
- FCA would take the risk getting sued from creditors for a quarter billion pound redress
- FOS getting nothing (loosing 12m)
- 400 jobs lost
- No lending access for people with bad credit
- Fueling the unregulated lending market (loan sharks)
- Bad press on FCA
2. New SOA deal
- Showing to FCA that shareholders contributed almost all of the shareholders equity (compensation provision)
- Rewrite SOA and show that there is much more equity (159m provision - 84m paid, plus 35m, plus 15% until claims are paid in full over time)
- Get guidelines from FCA about conditions under claims need to be upheld (if loan was repaid by customer, he should not be able to claim that he could not afford it)
- Get a non objection letter from FCA
- Go to voters and get +95% for the better deal with approval from FCA
The FCA made a big mistake stepping in so late. They could have acted earlier and now they need also to take the blame that more money was wasted, which could have gone to creditors. Since this has been only the second SOA in the UK which did not get approval by court after 95% voted for it, i cant see a judge not sanctioning a SOA 2 if Amigo played by the rules. I think AMGO did nothing wrong and played the situation fair. That need to be recognized. Let´s keep fingers crossed.
The BOD presented to the judge this graph: https://www.amigoscheme.co.uk/docs/FinancialTimelines.pdf
What points out to me is the following:
- Pay back for credit facilities by this June 2021
- Loanbook of 412,2m at 31.12.2020 should generate more cash flow as shown in the graph.
Evidence page 1: https://amigoloans.cdn.prismic.io/amigoloans/cd119243-282e-4700-9032-6bd9a20c0a37_Q3+Results+Announcement.pdf
- The loanbook should at 49,9% average interest generate at least 500-600m more revenue
- There are only 234m bonds left to be repaid at Jan. 2024 (with interest up to 270m)
So how can there be any risk of insolvency or administration and where does the graph reflect the additional cash from the loanbook?
What happens to the cash flow of 20-30m per month after credit facility is paid back. BOD provided the graph showing to the judge that from June there are only the bond holders left with repayment date of Jan 2024. if AMGO continues to get 15-20m cas per month it would be 90-120m more cash minus opex. Redress would need to be paid 6 month after SOA sanction. There is strong cash flow at AMGO and therefore Admin is in my view nonsense.
Prolee.....Do you have any evidence of that? If the judge says, there is no evidence (read paragraph 85 of the judgement)
"The bonds have the benefit of a floating charge over the cash, but there is no evidence that the security contains restrictions on the ability of the Group to use the cash in its business."
Here is the evidence: https://www.amigoscheme.co.uk/docs/AllSchemeltdJudgement.pdf
So now you know either more than the judge (then please share that with us) or you are just posting another nonsense.
@ Maverick. Thank you for sharing the document. With all the respect but i could not find anything in the document what the BOD should already know. The BOD have a fiduciary duty to us shareholders and they will not do anything stupid, specially because they have their own skin in the game. Imagine they would choose Administration above SOA 2? I believe with all the evidence the BOD could be liable for damages. They clearly stated that SOA is needed or otherwise there is a risk of insolvency. AMGO just need to show more evidence of that and make the minor necessary changes to the SOA.
@ prolee. I hope somebody is following you. We need a balanced view. It would be great if you could back things up with some evidence as i mostly do. So far you always show up when i show up. I hope you don´t become a typ of fanboy.
Remember - this is my investment philosophy. There is no trying at high risk AIM stocks (of course there is always some guess work). Take a break and relax. https://www.youtube.com/watch?v=2oq0YNo02KM&t=30s
@ prolee. You must be a very bright person. That is what BB are therefore. Everybody can be bullish or bearish. What is your problem with that. Are you not able to make your own decision or do you want to play the role of BB police here. I assume you are a retired police man. You mentioned you have reported me. Any feedback?
If you go into a pub and order a beer, there is a risk somebody could make a call to the owner of the pub and pull the plug saying there is a bomb in the basement, what would you do?