28th Sep 2022 10:00
(Alliance News) - Amigo Holdings PLC on Wednesday said it was proposing a capital raise of GBP40 million as it finalising planning for a pilot scheme that could see it return to lending.
The GBP40 million capital raise, which will be completed in May 2023, is part of a customer redress scheme to settle claims following probes from UK regulators into mis-sold loans. 88% of all creditors voted for the scheme when it was proposed, and it was approved by the UK high court in May.
Shares in Amigo were trading 4.6% higher at 4.63 pence on Wednesday morning in London.
Under the scheme, the Bournemouth-based guarantor loan provider is required to deliver an initial contribution of GBP97 million. Amigo said it expects to meet the contribution. It noted it currently has unrestricted cash of GBP125 million. Amigo also will look to raise debt to support growth.
Another condition of the scheme is that Amigo returns to lending by February. The company noted that the UK Financial Conduct Authority has "yet to approve our return to lending". However, following a long period of review and discussion, the company is finalising details to commence a lending pilot.
During the pilot, Amigo will be undertaking "significant testing" to ensure that it is lending affordably. "We continue to discuss our approach and implementation with the FCA to achieve these goals as soon as possible," Amigo explained.
The company announced a new lending product in June, the RewardRate brand, designed to meet demand for "competitively priced, mid-cost, specialist credit products".
Amigo said it has the "right values and operational processes in place" and it was "confident the mistakes of the past will not be repeated".
By Chris Dorrell; [email protected]
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