Source - LSE Regulatory
RNS Number : 2505J
Amigo Holdings PLC
21 December 2020






21 December 2020


Amigo Holdings PLC

("Amigo" or the "Company")


Potential Scheme of Arrangement

Amigo Holdings PLC (LSE: AMGO), a leading provider of guarantor loans in the UK, announces that the Board has decided to pursue the use of a Scheme of Arrangement under Part 26 of the Companies Act 2006 ("Scheme") in relation to the group's Redress Claims (as defined below).  The Directors believe that a successful Scheme will provide certainty to the total liability arising from customer complaints. 


Whilst the Scheme will not enable all claims relating to customer redress issues arising from unaffordable lending ("Redress Claims") to be paid in full, the Directors have now decided that a Scheme is the best vehicle for addressing customer Redress Claims. A key objective is that all customers are treated equitably.


It is anticipated that the Scheme will commence as soon as practical in 2021 and is subject to the approval of the requisite majority of Scheme creditors (i.e. those with Redress Claims) and thereafter, Court sanction will be required.  To ensure equal treatment of customers with Redress Claims, Amigo will stop the ongoing payment of all Redress Claims, except for those cases where the Redress Claims result from: (i) reviewed and upheld complaints where a Final Response Letter has been issued to the customer, dated before 21 December 2020; or (ii) where the complaint has been referred to the Financial Ombudsman Service ("FOS") and it has upheld that complaint and issued a final decision letter to that effect, dated before 21 December 2020. An application has been made to Amigo's regulator, the Financial Conduct Authority ("FCA"), for a DISP waiver to suspend complaint handling as the proposed Scheme will address those complaints. The FCA's response is awaited and, in the meantime, complaint handling will continue.


The Scheme will calculate redress due to all claimants lodging a claim within the required lodging period, expected to be 6 months from the yet to be determined effective date of the Scheme. Under the Scheme there would be an automatic right of set-off for the redress due to claimants against their current outstanding loan balance ("Balance Adjustment"). Any redress due, where loans have been satisfied, including after the Balance Adjustment, will be aggregated with all the outstanding other unsettled redress due on Redress Claims and paid out equitably, to the extent they can be, on a pro-rated basis from a pool of assets, described in the paragraph below.  

The Company anticipates the immediate cash payment under the Scheme towards the Redress Claims Pool will be £15 million, with the option for this to increase should the anticipated Balance Adjustments be less than expected, up to an extra £20 million of cash. In addition, the Company will make a cash contribution to the Scheme based on 5% of profit for the next three financial years ending 31 March 2024. In light of the cash contribution to the Scheme and the Balance Adjustments to the loan book, the Company believes the requirement for the current unutilised complaints provisions remains in line with expectation.   

As noted in the announcement dated 26 November 2020, the severity of the complaints' position in addition to other matters referenced in that announcement, constitutes a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Whilst the Directors consider that Amigo has adequate liquidity for the medium term, they believe that without the Scheme the level of Redress Claims would jeopardise the Group's future. Amigo continues to explore alternative options but it is likely the alternative options would result in those with Redress Claims receiving considerably lower amounts (if any at all) than they would under the Scheme.

Amigo has notified the FCA and the FOS about the Scheme and further details will be provided to them shortly for each to consider their full response.  

Gary Jennison, CEO of Amigo, said: "Together with the Board of Amigo, I believe that a successful Scheme of Arrangement will provide certainty to the total liability arising from customer complaints. This Scheme is intended to give a fair outcome for all our stakeholders, taking into account creditor priority rankings and will allow the Company to return to lending. We provide vital financial inclusion to millions of borrowers in the UK unable to access mainstream credit, which will become even more important as the UK recovers from the economic impact of Covid-19.

"Notwithstanding the prospect of a Scheme addressing our Redress Claims, there are also other difficulties in the wider economy, including the very real and immediate impact of Covid. The Board is confident that it will be able to restart lending in early 2021, though many challenges remain on the way to Amigo returning to the success that the Board believes Amigo can achieve for its customers, employees, lenders and all its other stakeholders."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014. The person responsible for this announcement is Roger Bennett, Company Secretary.




Amigo Holdings PLC                    

Kate Patrick                        Head of Investor Relations         

Roger Bennett                  Company Secretary



Hawthorn Advisors

Lorna Cobbett                   Tel: +44 (0)7771 344 781



Senior Secured Notes

This announcement constitutes notice by Amigo Luxembourg S.A. (the "Issuer") to the holders of the Issuer's 7.625% Senior Secured Notes due 2024 (for the notes issued pursuant to Rule 144A of the United States Securities Act of 1933, ISIN: XS1533928468 and Common Code: 153392846; for the notes issued pursuant to Regulation S of the United States Securities Act of 1933, ISIN: XS1533928625 and Common Code: 153392862) (the "Notes") issued pursuant to pursuant to Section 4.03(a)(3) of an indenture dated January 20, 2017 among, inter alia, the Issuer, the guarantors named therein and U.S. Bank Trustees Limited, as trustee and security agent.  Amigo Holdings PLC is the indirect parent company of the Issuer. This announcement shall constitute a "Report" to holders of the Notes.




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