MARKET REPORT: Amigo fights for survival after £45m cash talks fail
MARKET REPORT: Shares in beleaguered Amigo tumble as it struggles to survive after revelation talks to raise £45m fell through
Shares of beleaguered Amigo plummeted as it struggled to survive after talks to raise £45m fell through.
In an update on plans to raise the money, the troubled lender said it was now “unlikely” to find the money needed before a regulator-mandated deadline of May 26 this year.
Amigo added that it had ‘indications of interest’ in equity subscriptions to fund £21m, comprising £11m of common stock and £10m of exchangeable bonds.
The Bournemouth-based sub-prime borrower has been on a survival basis since being suspended from lending by the Financial Conduct Authority after failing to conduct proper affordability checks and for making high-interest loans to borrowers with shaky credit histories.
Amigo received high court approval for a recovery settlement last year and was given the green light by the FCA in October to resume lending. The terms of the scheme required the company to raise £45 million from investors.
In trouble: Amigo has been on a survival basis since it was suspended from lending by the Financial Conduct Authority
At a meeting with shareholders on Wednesday ahead of talks breaking down, bosses said after approaching 200 potential lenders it had failed to secure the needed funds, warning that a “fallback solution” from a orderly run-down of the company was the solution. only viable alternative in the absence of investors.
Shares floated at 275p in June 2018. That valued the company at £1.3bn.
But it’s now worth just £10.4m after shares fell 13.6 per cent or 0.3p to 1.9p.
The FTSE 100 was down 1.7 percent, or 131.63 points, to 7748.35 and the FTSE 250 was down 1.7 percent, or 335.44 points, to 19357.46.
New data showed that the economy recovered and grew by 0.3 percent in January. That was higher than the 0.1 percent economists had expected after it fell 0.5 percent in December.
On the other side of the Atlantic, the latest US employment data showed the world’s largest economy added 311,000 jobs last month. This was more than the 220,000 jobs economists had predicted.
Back in London, Schroders fell 4 percent, or 19 pence, to 460.1 pence after Credit Suisse downgraded the asset manager’s rating from “outperform” to “neutral” and cut its price target from 510 pence to 470 pence. The broker said he expects the company to face higher costs.
Things were hardly brighter at Segro after Barclays downgraded the commercial real estate group from overweight to equal-weight and cut its target price from 900 pence to 800 pence. Shares fell 1.1 percent, or 8.6 pence, to 770.6 pence.
Berkeley remained optimistic about housing demand in London and the South East, despite a drop in sales. The homebuilder said sales since late September last year were about 25 percent lower than in the first five months of the fiscal year, as higher interest rates hit mortgages and rising costs for potential property buyers. But sales prices in the four months to February 28 were above the group’s targets. It also reiterated that it should make around £600m in profits for the year to April 30. Shares rose 0.07 percent, or 3p, to 4039p.
Meanwhile, First Group moved ahead after bus passenger numbers increased with the help of government schemes in England and Scotland. The carrier said bus passenger numbers rose to 83 percent of 2020 levels while the driver shortage eased.
As a result, earnings for the year to March 25 should be above previous expectations. Shares rose 1.8 percent, or 1.9 pence, to 108 pence.
Graphene company Versarien fell 34.5 percent, or 1.74 pence, to 3.31 pence after founder and CEO Neill Ricketts, who helped drive the company to AIM in 2013, stepped down. A spokesman said: “The board is considering the appropriate management structure for the company’s longer term.”