8th Jun 2020 10:13
(Alliance News) - Amigo Holdings PLC on Monday said it has terminated its sales process as a potential acquirer with whom the company had been in discussions has withdrawn.
The subprime lender also reported the formal resignation of Stephan Wilcke as board chair and said it has decided to cancel its final dividend for the year to March 31 due to a material rise in complaints and the associated costs in resolving them.
Shares in the Bournemouth, England-based company were down 24% at 12.93 pence each in London.
Amigo said it has no other acquisition offers and therefore is terminating its formal sale process with immediate effect. The lender had been in talks with an unnamed buyer over a potential 20.9p each offer for Amigo, valuing the entire company at roughly GBP100 million, compared to its current market capitalisation of GBP61.5 million.
In May, Amigo founder and 61% owner James Benamor had said he would block the sale of the company.
Amigo, in April, said that Benamor had called for a shareholder meeting to remove the entire board. He had hit out at Amigo on social media in March, saying the company is "committing slow motion suicide".
Benamor up until March sat on Amigo's board. His recently ended stint on Amigo's board began last December, after he first left in September 2018.
Amigo and Benamor settled their dispute last week, with Benamor deciding to sell his entire 61% stake in the company.
The company on Monday also said that Wilcke will leave the company on a mutually agreeable termination date, expected to be a date after the company's general meeting on June 17.
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."
Richmond Group is the investment vehicle of Benamor.
Amigo further on Monday said it has seen a significant increase in customer complaints in recent weeks and has now agreed a voluntary requirement with the UK Financial Conduct Authority to work through and reach a decision, before the end of June, on a backlog of complaints which have arisen principally in 2020.
The cost of clearing the backlog of complaints will be "at least GBP35 million and could be materially higher", the company said, adding that it also will record a "material increase in the provision in respect of complaints within its full year results for the year to March 31, 2020".
"In light of this increase in provision, the board believes that it is prudent to conserve capital in the business and thus will not be recommending a final dividend for the year ended March 31, 2020," Amigo explained.
By Tapan Panchal; [email protected]
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