In­creased in­ter­est

Amigo Loans has to en­dure some friendly fire as founder at­tempts to make a re­turn

The Daily Telegraph - Business - - Front Page -

When James Be­n­amor’s at­tempted board­room coup failed at Amigo Hold­ings less than three months ago, the founder of the high-in­ter­est lender ap­peared to ac­cept de­feat.

“Share­hold­ers have spo­ken,” he said. “They be­lieve in the board’s vi­sion, not mine.” At the time, he stuck to his word and said he would pro­ceed with sell­ing his 61pc stake in Amigo, held via his firm Rich­mond Group. Be­n­amor put the shares in the hands of a bro­ker with in­struc­tions to sell down his ma­jor­ity stake at a rate of 1pc ev­ery trad­ing day for three months. On Mon­day, Rich­mond owned just over 4pc of the Bournemout­h-based lender.

But Be­n­amor is back, try­ing to wrest con­trol of Amigo, with plans to oust its chair­man and fi­nance chief, re­store him­self as chief ex­ec­u­tive and turn around an em­bat­tled com­pany.

Ob­servers are baf­fled by the move. Stu­art Dun­can, an an­a­lyst at Peel Hunt, says: “We find this highly un­usual given [that Be­n­amor] has spent the last month or two sell­ing down his hold­ing.”

Amigo pro­vides up to £10,000 to bor­row­ers with poor credit rat­ings at an in­ter­est rate of 49.9pc if they can find a fam­ily mem­ber or friend to guar­an­tee re­pay­ments.

Crit­ics such as Labour MP Stella Creasy, how­ever, have dubbed it a “le­gal loan shark”, while reg­u­la­tors have set their sights on the mar­ket. Be­n­amor, who ap­peared on Chan­nel 4’s Se­cret Mil­lion­aire, founded the com­pany in 2005 when he was just 21 years old and made a for­tune when it listed for £1.3bn in 2018.

But af­ter a dis­mal year, the sub­prime lender is now val­ued at just £57m. In July, it plunged to a £38m an­nual loss af­ter pen­cilling in a £127m charge for deal­ing with the cost of cus­tomer com­plaints.

The Covid pan­demic has also ham­mered prof­its as it was forced to give pay­ment hol­i­days to 47,000 cus­tomers, and it de­cided to

halt new lend­ing ex­cept for key work­ers. The sever­ity of the com­plaints charge shocked in­vestors, send­ing its share price into freefall, and cou­pled with the Covid cri­sis, forced Amigo to warn that its fi­nan­cial fu­ture was at risk.

Amigo is also be­ing in­ves­ti­gated by the City watch­dog over whether it fol­lowed the rules when as­sess­ing bor­row­ers’ cred­it­wor­thi­ness.

Be­n­amor has now called a share­holder vote to re­move fi­nance chief Nayan Kis­nad­wala and chair­man Roger Lover­ing, and make him­self chief ex­ec­u­tive in a move that would see re­turn­ing boss Glen Craw­ford be­come his un­der­study. How­ever, Craw­ford has told the board he is not pre­pared to work for the founder, in com­ments Be­n­amor said were “per­son­ally hurt­ful”.

In a tweet last Thurs­day, Be­n­amor re­vealed that Rich­mond has made an ir­rev­o­ca­ble bid for 29pc of Amigo at 20p per share, to be ex­e­cuted if he is ap­pointed CEO, which sent shares up by 30pc.

He also quashed spec­u­la­tion that he could launch a com­peti­tor if his bid to se­cure a third term on the board fails. Be­n­amor will have to rely on pri­vate in­vestors and other share­hold­ers to get his lat­est coup at­tempt over the line, how­ever, as Rich­mond will no longer be a share­holder at the time of the vote.

In his most re­cent blog post, he wrote: “We are re­ly­ing on the over­whelm­ing sup­port I have re­ceived from pri­vate in­vestors and share­hold­ing mem­bers of the Amigo found­ing team to pass th­ese res­o­lu­tions. The rise in share price last week, and the re­duc­tion in share price on Mon­day, demon­strates the way that in­vestors view Amigo with me, and with­out me.”

Amigo’s board hit back, cau­tion­ing share­hold­ers that the ir­rev­o­ca­ble in­struc­tion “is con­di­tional on Mr Be­n­amor be­ing ap­pointed CEO of Amigo and not upon him be­ing elected to be a di­rec­tor of Amigo”.

They added that if elected, Be­n­amor will not au­to­mat­i­cally be­come chief ex­ec­u­tive as the ap­point­ment re­quires the ap­proval of the board and of the City watch­dog.

Un­sur­pris­ingly, Amigo has rec­om­mended share­hold­ers to vote against all of Rich­mond’s res­o­lu­tions.

Peel Hunt’s Dun­can says: “This re­mains a volatile sit­u­a­tion that is now al­most be­ing played out on Twit­ter.”

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