Last month, Amigo Loans said that an anonymous buyer was ready to offer 20.9p per share, or £ 100 million, provided that its founder and 61% shareholder, James Benamor, voted for and ended to his attempts to replace the entire board of directors. But while Benamor has since agreed not to try to sit on the board of directors at next week’s emergency meeting, he has publicly refused to accept the offer.
Amigo told shareholders on Monday that the bidder had concluded that he should withdraw from the sale process “given the current market environment”.
Its shares fell 16% on the news to 14.3p, valuing the company at £ 68m. It has now lost 95% of its market capitalization since Mr. Benamor launched the business in June 2018.
Regulatory review and borrower complaints have weighed on the share price and increased costs in recent months.
Amigo offers “secured” loans, which are available to people with bad credit histories if their friends or family are willing to cover their repayments in the event of hardship.
This year, the number of complaints about these loans increased sharply and Amigo concluded that the cost of clearing the backlog – to comply with an agreement with the Financial Conduct Authority – would be “at least £ 35 million and could be significantly higher. “
As a result, the company said it should “substantially increase” its provisioning for claims in its annual accounts due later this month, and has chosen to cut its annual dividend to save money.
Last week, Amigo revealed that the FCA is investigating its methods of verifying client credit.
Shareholders are now faced with the decision to support the current board of directors to solve the problems and risk that Mr. Benamor sells all of his stake – or vote for his two new proposed directors and risk new constraints for the company. None of its proposed new directors have FCA clearance yet. Otherwise, Amigo’s lending activities could be severely curtailed.
Benamor accused the current members of the board of directors of mismanaging the business and of trying to hang on to their jobs to prevent the review of their conduct.
On Friday, he said if shareholders vote to reappoint the board of directors, he will sell his stake, unloading 1% of it every trading day. According to a person close to the company: “He says that if the board of directors stays, he leaves. ”
However, President Stephan Wilcke said on Monday that he would resign before his scheduled departure in July to refute Mr. Benamor’s allegations. “I have chosen to resign now so that everyone is clear that the claims of [Mr Benamor] the motives of myself and the board of directors to cling to our seats for our own ends are completely untrue, “he said.
Last week, fellow administrators also said they were ready to leave, provided there was an orderly succession process.