Amigo’s sale process aborted, as lender faces £35m complaint costs

In a regulatory update issued this morning (June 8), the lender also provided a timeline for the departure of its chairman, who had already announced he wouldn’t be standing for re-election this year.

The update follows a series of often bizarre announcements from the beleaguered lender, which is facing a regulatory investigation over its credit-worthiness assessments, and a battle with founder James Benamor who’s seeking to wrest control of the company’s board.

On complaints, Amigo said it has seen a significant increase in recent weeks. The lender has now agreed a voluntary requirement with the Financial Conduct Authority to work through and reach a decision, before the end of this month, on complaints which have arisen principally in 2020.

While there’s uncertainty around the outcome, Amigo believes that clearing the backlog of cases covered by the requirement will cost at least £35m – but it could be materially higher.

Amigo now expects to report a material rise in complaint provisions within its full-year results for the 12 months to March 31 2020, which are expected by the end of June.

Due to the increase, the board said it is prudent to “conserve capital in the business” and will not be recommending a final dividend for the year to March 2020.

Sale process
Amigo said its formal sale process had identified potential acquirers who made indicative offers, which were materially above where Amigo’s shares were trading at the time.

But given the current market environment, the potential buyer that had been progressing talks has now pulled out. Because no other offers have been made, the sale process has been aborted immediately.

The update stated that Amigo is “committed to working with all stakeholders and regulators to determine a clear path forward for the company”.

Chairman’s departure
On December 9 last year, Amigo announced that its chairman Stephan Wilcke would not stand for re-election at the lender’s forthcoming annual general meeting.

Wilcke has now served formal notice of resignation. The board to intends to set a mutually agreeable termination date, expected to be after the forthcoming general meeting on June 17. The board’s statement thanked him for his significant contribution to the business over many years.

Amigo said it will make an announcement on the handover to an interim chairman in due course.

Wilcke said: “I have chosen to resign now to make it crystal clear to everyone that the assertions made by Richmond Group about the motivations of myself and the board as clinging to our seats for our own ends are completely false.

“The EGM vote is about the relationship agreement and compliance with regulatory obligations, and nothing else. I feel able to resign at this point in time as the two key matters keeping me on the board being the FSP and the relationship agreement dispute with Richmond Group are now settled.”