Subprime lender Amigo to wind down after failing to raise funds

Subprime lender Amigo Holdings said on Thursday it would wind down after failing to secure adequate investor interest in a crucial capital raising, ending months of efforts to restructure its ailing business.

Shares in the company, which specialises in providing credit to borrowers typically excluded by mainstream banks, crashed 79 per cent in early trading after it said it would stop lending immediately and begin a 12-month wind-down process.

“This is a very sad day for all our employees who have worked extremely hard to address historic lending issues and rebuild a new Amigo, and for our shareholders and wider stakeholders,” chief executive Danny Malone said.

Amigo also has an Irish operation and started lending here in February 2019, targeting people with “bad credit” who had been turned down by traditional lenders. It offered loans of up to €5,000 at an annual rate of 49.9 per cent. However, it stopped all new lending in 2021 pending its restructuring.

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The loan book will continue to be collected during the wind-down phase and employees will continue to be paid, the company said.

A spokesperson said the company employed fewer than 200 staff.

Amigo has been scrambling to survive after struggling to cope with the cost of compensating customers for mis-sold loans. It had attempted to secure £45 million (€51 million) of capital from investors as a part of a reorganisation of its business, but has repeatedly warned it was struggling to secure adequate interest before a regulator-imposed deadline of May 26th.

Shares have collapsed 99 per cent from a high of 315 pence shortly after a 2018 initial public offering valuing the business at £1.3 billion. – Reuters