Amigo fights for survival after £45m cash talks fail
ShareS in beleaguered Amigo tumbled as it scrambled for survival after revealing that talks to raise £45m had failed.
In an update on plans to raise the cash, the troubled lender said it was now ‘unlikely’ to find the required money before a regulator-imposed deadline of May 26 this year.
amigo added it had ‘indications of interest’ in equity capital subscriptions to fund £21m, made up of £11m in ordinary share capital and £10m in exchangeable notes.
The Bournemouth-based subprime lender has been on a survival footing since it was suspended from lending by the Financial Conduct authority after failing to conduct proper affordability checks and for dishing out high-interest loans to borrowers with shaky credit histories.
amigo secured high court approval for a redress scheme last year and was given the green light from the FCa to restart lending in October. Under the terms of the scheme, the firm was required to raise £45m from investors. In a meeting with shareholders on Wednesday, prior to the failure of talks, bosses said after approaching 200 potential backers it had failed to secure the required cash, and warned that a ‘fallback solution’ of an orderly wind-down of the business was the only viable alternative if investors failed to materialise. Shares floated at 275p in June 2018. That valued the business at £1.3bn.
But it is now worth just £10.4m after shares tumbled 13.6pc, or 0.3p, to 1.9p.
The FTSE 100 fell 1.7pc, or 131.63 points, to 7748.35 and the FTSE 250 was down 1.7pc, or 335.44 points, to 19357.46.
Fresh data showed the economy rebounded, to grow 0.3pc in January. This was higher than the 0.1pc economists had expected after it fell by 0.5pc in December.
across the atlantic, the latest US employment figures showed the world’s largest economy added 311,000 jobs last month. This was more than the 220,000 jobs that economists had forecast.
Back in London, Schroders sank 4pc, or 19p, to 460.1p after Credit Suisse lowered the wealth manager’s rating to ‘neutral’ from ‘outperform’ and cut the target price to 470p from 510p. The broker said it expected the business to be hit with higher costs.
Things hardly looked brighter at Segro after Barclays downgraded the commercial property group to ‘equal-weight’ from ‘ overweight’ and reduced the target price to 800p from 900p. Shares dropped 1.1pc, or 8.6p, to 770.6p.
Berkeley remained upbeat over demand for homes in London and the South east despite a slump in sales. The housebuilder said sales since the end of September last year were around 25pc lower than the first five months of its financial year after higher interest rates hitting mortgages and rising costs for potential property buyers. But selling prices in the four months to February 28 were above the group’s targets. It also reiterated it should make around £600m of profit for the year to april 30. Shares inched up 0.07pc, or 3p, to 4039p.
Meanwhile, First Group cruised ahead after bus passengers increased with the help of government schemes across england and Scotland. The transport operator said its bus passenger volumes rose to 83pc of 2020 levels while driver shortages eased.
as a result, its profit for the year to March 25 should be above previous expectations. Shares rose 1.8pc, or 1.9p, to 108p.
Graphene company Versarien plunged 34.5pc, or 1.74p, to 3.31p after founder and chief executive Neill ricketts, who helped the business float on aIM in 2013, resigned. a spokesman said: ‘The board is considering the appropriate longer term management structure of the company.’