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@ Senator. The timeline from BOD on the SOA suggest that it will be paid back in June 2021. Also if you look at the last quarterly results you can see that it was paid down by 56m, which is 18,6m per month at end of 2020. If u use that 18,6 x 6 month would be the 112m paid in full
Since i own more than 3% of the company, i would like to shine some light on the risk and fear of insolvency.
The only source who initiated the insolvency darmocel sword was the BOD to get the SOA 1.0 approved (this might be true in Jan 2024 if AMGO will not start re-lending). SOA 1.0 was agreed by FOS together with 95% of the customers. Insolvency would require a liquidity crunch, which is not there until Jan 2024, according ot the judge. Evidenced by paragraph 85 and 86 of the judgement. (https://www.amigoscheme.co.uk/docs/AllSchemeltdJudgement.pdf)
So if you do not trust an insolvency judge from the high court, whom else would you trust. There is no immenent risk of insolvency and the route to SOA 2.0 can go in two ways.
1. With no objection of FCA, what BOD is trying now. (in this case a better deal need to be agreed with creditor counsel and FCA)
2. Without support of FCA (in this case AMGO just need to increase the timeline of SOA 1.0 from 4 years payment of 15% pre-tax profits to infinite to pay 100% of redress claims in the future. In this case a judge can not say this is unfair)
Position of the company until Jan 2024
- Securitisation will be paid down by the end of this month (Evidence: https://www.amigoscheme.co.uk/docs/FinancialTimelines.pdf)
- Monthly cash collection between 15-20m (slowly decreasing as the loanbook ages)
- Cost of management approx. 3,75m per month with 18,6m cash collection per month (status June 2021)
- 180-200m cash in the bank
- loanbook of approx. 250-300m with 49,9 APR and strong collection
- SOA 1.0 passed 1. court date, 95% of the votes and failed at 2. court hearing
- No reason why SOA 2.0 will not pass. See SOA 2.0 from sunbird case (https://www.casemine.com/judgement/uk/5fe0507e2c94e062daae2347)
- AMGO will work with FCA to get a non-objection letter to a better deal (now they understand the SOA)
- Financials have been delayed until SOA 2.0 will start in order to keep the redress amount at 159m in the balance sheet.
Timeline:
- Expect announcement of SOA 2.0 as soon as possible (hopefully this time with no objection of FCA)
- RNS with information that a consent have been found with the creditor counsel about a fairer deal
If everybody will be on the same page, the SOA 2.0 will cross the line and everybody knows that. Last time the SP went to 29,5p short before court hearing. Make your own judgement and reasearch. I am confident as ever.
@ Senator. The timeline from BOD propose that the 112m will be repaid by June https://www.amigoscheme.co.uk/docs/FinancialTimelines.pdf
If you compare the facility over last quarter results you can see that it was repaid at a rate of 18,6m
@ Iknownuffin - I understand that, but if the sucuritasation facility will be paid back by the end of June the monthly collections should be still at approx. 15m per month. So in 3-4 month there should be enough cash to for the total of 234m of the bonds. Or do i miss something here?
- 234m in Bonds
- 159m redress provision (Could be reduced if SOA get´s approved)
+200m cash in bank
+250m loanbook
=23m free cash
So my guess is that if SOA is agreed with a 15m payment, the 159m would be removed from the balance sheet (wouldn´t it?)
The loanbook should still be at approx. 250m. So if the loanbook will be repaid over time and adding to the 200m cash in the bank, what am i not getting here. If there is 200m sitting in the bank now and they still collect 10-15m per month, where is that money go to at cost of management of only 3,75m per month?
@ Jimmy - That does not mean, that they can adjust the SOA and propose it again with better terms. It has been done in the sunbird case and second SOA passed. So what is the problem?
Ok. There are bonds which need to be repaid in 2024 with 234m. Now the company has about 200m in cash in the bank. The future collection of 18,6m (declining of course) would go straight towards the cash position. If you look at the financial timeline from the last scheme, there is enough cash to repay Bonds at the end, even without new relending. https://www.amigoscheme.co.uk/docs/FinancialTimelines.pdf
1. The securitisation facility will be paid back at the end of June 2021.
2. The redress provission is 159m
3. The cash is approx. 200m
4. From July on the 18,6m monthly collections formerly used for securitisation will go to cash balance
So who has the power to file for insolvency and why?
That was one of my biggest concerns. If that facility is paid back almost in full, than there is no risk in insolvency from that side. Now ghey have time until end of July to announce new SOA and keep the redress provision at 150m. SOA 2.0 is better deal with sign off from FCA. If FCA does not agree to better SOA terms, AMGO could still propose SOA 2.1 with infinite 15% pre-tax payments until redress is paid in full (no judge can vote against that). I am having difficulties to see where AMGO is facing a cash liquidity crisis before 2024.
Let´s face it. If the SOA 2.0 will be fixed and that is achievalbe, AMGO can start relending and if you look into 2019 financials, they made +80m profit a year. So that would give this company a market cap of 1,2 billion at 15x. Now it is valued at 33m only because they try to sort out the SOA 2.0. There is an amazing post covid market and hopefully Bybrook, JPM or another lender is giving a letter contingent of passing a SOA 2.0 to provide funding. The lender would not taking any risk and BOD could go to FCA and judge and say look, if you agree this is what we can provide.
BOD could offer a SOA 2.0 with 100% redress payments to customers. About 72.000 former customers voted for the SOA 1.0 with approx. 280m claim value, going back to 2005. Many of them have already repayed the loans and it would be difficult to proof why they could not afford it, when it has already been repaid. My guess is that there will be less then 100m cash to settle all claims. BOD is duing the first step to negotiate a better deal accepted by creditor counsel and then go the FCA and ask for their letter of no-objection. If they get it that would be great. If they are not getting it they could still move forward with SOA 2.0 and keep everything the same as agreed already by 95% of the votes and just increase the 15% pre-tax profit condition from 4 years to infinite years until all is repayd. Nothing can stop AMGO from doing that and judge would need to agree because it is the most fair solution possible. In any case, this is not a buring ship. BOD is just handing the envelope back to FCA.
AMGO has approx. 3,75m montly running cost and approx. 20m in monthly revenues at 49,9 APR. Even if you deduct some customers not paying the monthly net APR should be arround 33% net, which is given AMGO 6,6m montly earnings. It would not look good at this point to show that the cash position would increas by 2,85m per month. So if you do your due dilligence you might come to the same point. The board has a fiduciary duty to all stackeholders and will find terms agreable to the FCA. SOA 2.0 will be the best option forward. AMGO could even afford to repay 100% of the redress claims over time (infinite pre-tax profits of 15%). In this case they would not even need the FCA to agree. Why would a judge not agree if AMGO would propose a SOA to repay 100% of redress claims.
This is playing the cards right and kicking the ball into the FCA court. They first need to agree the terms of new SOA and a no-objection lette. New SOA can be done qick and it will not cost as much as the previous one. Imagine RNS that AMGO has consulted with FCA and creditors councel and a non objection letter has been issued.
The following evidence should give you an overview about the status of the business:
1.) There is no mid term risk of insolvency with AMGO having strong cash position of 200m and 150m accounting provision for redress complaints.
Evidence: Paragraph 85 and 86 of the judgement. https://www.amigoscheme.co.uk/docs/AllSchemeltdJudgement.pdf
2.) The cost of management is approx 45m (Considering that there is no marketing costs)
Evidence: Page 32 (Reporting cost of management) https://www.amigoplc.com/investors/annual-report-2020
3.) Strong revenue at approx 200-240m anual revenue with high margin (137.000 customers with average loan of 1.400 GBP)
Key points to survive:
- Appeal SOA judgement on facts (no relending scenario)
- Start SOA 2.0 with adjustments to pay redress customers 100% over time through infinite 15% pre-tax profit payments
- Get no-objection letter fro FCA
- Start relending immediately
Next possible RNS
- Quater results
- SOA update with timeline
Why SOA 2.0 will pass:
- The law allows for SOA if it is fair
- AMGO can afford and provide a fair SOA and repay redress customers at 100% (relending scenario)
Feel free to prove any evidence to be wrong. I am convident as ever and just holding my position. After the last bad news there will come some good news. 95% of redress customers accepted the SOA 1.0 already. There is no reason why SOA 2.0 could not pass. A great example is the sunbird case.
First SOA was not sanctioned at Sep 18, 2020: https://www.casemine.com/judgement/uk/5f683ab52c94e061ac5d9834
Second SOA was sanctioned at Dec 16, 2020: https://www.casemine.com/judgement/uk/5fe0507e2c94e062daae2347
This is a great opportunity to invest in a high risk distressed company with a great post covid market.
@ London.....until the judgement is not appealed with evidence, that FCA and judge did not understand the position where AMGO is in, we can not assume they are liers. An appeal of the judgement would clear them. They are decent people (approved by the FCA). It means that the FCA approved the board and now they should not trust them. Come on.