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