27th Jan 2020 08:33
(Alliance News) - Amigo Holdings PLC said Monday it has launched a strategic review and formal sale process in a bid to "maximise value for its shareholders".
This may result in a sale of the company. Amigo said controlling shareholder Richmond Group is a "willing seller" of its 60% stake.
Shares in the sub-prime lender were down 35% in London on Monday morning at 44.12 pence each.
Amigo provides loans to consumers, payments for which are guaranteed by a borrower's friend or family member.
The review will be looking into the lender's "strategy, ownership and operating model". Amigo said it is considering the potential sale of the company as a whole, the sale of parts of the group, the sale of the UK business, and a potential de-listing of the company's shares.
Amigo has appointed RBC Capital Markets to handle the sale process.
The announcement follows a board clear-out in early December. James Benamor, founder and previous chief executive of Amigo, returned to the company and was appointed a non-independent non-executive director with immediate effect. Benamor holds his stake in Amigo via Richmond.
At the same time, Chair Stephan Wilcke said he wouldn't seek re-election at the firm's next annual general meeting, while Hamish Paton resigned as chief executive.
Amigo floated in June 2018 with a market capitalisation of GBP1.31 billion, making Benamor among the wealthiest businessmen in the UK at that time. Since then however, the stock has plummeted, reducing the company's value to GBP217 million as of Monday morning.
Turning to the lender's current trading, Amigo confirmed its loan book growth and impairments for the nine months to December 31 were in line with guidance.
Amigo said it continues to face a "challenging operating environment".
The lender continued: "While Amigo remains confident in the robustness of its approach to lending decisions, we are concerned that there may be increased pressure on our business and a continual evolution in the approach of the Financial Ombudsman Service."
In the six months to September 30, Amigo recorded pretax profit of GBP42.3 million, down 13% on the GBP48.4 million reported the year before.
Profit was hurt by a 75% increase in total operating expenses. Amigo, at the time, said the rise in costs was in line with impairments and investment in the business.
"Future lending volumes could be impacted by the strategic review of the business model," Amigo added on Monday.
Amigo's net loan book ended September 30 at GBP730.7 million, 8.8% higher than the GBP671.7 million seen at the same point a year earlier.
By Paul McGowan; [email protected]
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