Amigo struggling to raise £45m survival cash as it swings to hefty loss
Beleaguered lending shop Amigo said it was yet to secure the £45m funding it needed for survival today as it swung to a hefty loss in the nine months to the end of December.
The controversial Bournemouth-based firm has been struggling to restart lending again in full after being punished by regulators for dishing out loans to borrowers with shaky credit histories between 2018 and 2020.
The firm is operating under a ‘scheme of arrangement’ authorised by the High Court in May last year, which included a requirement of a cash raise and £15m payment towards redress for customers.
However, in its results for the nine months to December today, chief Danny Malone said the firm was struggling to attract the cash it needed from investors.
“In recent weeks we have made progress with the capital raise, despite extremely difficult market conditions, but have yet to secure the equity funding needed and conversations with potential investors are ongoing,” he said in a statement.
Amigo said that talks with investors to underwrite a £45m equity raise “continue” and it had received “non-binding, indicative interest” for between £10m to £15m of equity and £10m of exchangeable notes so far.
The update came as Amigo said it had swung to a pretax loss for the nine months of £21.3m compared with a profit of £1.6m for the same period a year earlier, which it chalked up to the unwinding of its legacy loan book and “very limited” new lending.
Revenue fell 77 per cent to £17.8m from £75.7m for the year-earlier period as customer numbers plunged more than half.
Today’s update comes just one week after the Financial Conduct Authority announced it would spare Amigo a £73m fine on the ground it would inflict “serious financial hardship” on the firm and potentially scupper payouts to customers.
The FCA authorised the firm to restart lending in October on the grounds it had progress towards a cultural turnaround.