LONDON (ShareCast) - (Sharecast News) - Amigo shares tanked on Monday after the guarantor lender said it had failed to secure a commitment from a cornerstone investor to underwrite the whole of its £45m capital raise and that it is now looking for a syndicate of investors.
Amigo, which has been hit by a deluge of customer complaints over alleged mis-selling, restricted lending at the start of the pandemic before suspending all activity in November 2020.

However, following a lengthy investigation, the Financial Conduct Authority agreed a rescue plan with the company, which included paying compensation to creditors and returning to lending by 26 February 2023.

The high court sanctioned the scheme in May 2022, and in May, Amigo said the FCA was satisfied it had met the threshold conditions for Amigo to return to lending.

The scheme of arrangement sanctioned last year contained a preferred solution conditional on the completion of a capital raise by 26 May, followed by the contribution of a minimum £15m payment to the scheme fund for creditor redress.

But Amigo said on Monday that so far it has been unable to secure a commitment from a cornerstone investor to underwrite the whole of the capital raise.

"A number of investors have expressed possible interest in making a minority investment," it said, and the group is now assessing whether there is sufficient interest for a syndicate of such investors to be formed.

Chief executive Danny Malone said: "The board and senior executives have worked continuously over the last few months to secure the future of the business and our focus remains on finding a solution that is in the best interests of all our stakeholders.

"It is disappointing that we have so far been unable to identify the requisite equity backers for the business. However, we are continuing with our efforts to put together an equity investor consortium as expeditiously as possible. We realise that the economic backdrop since we announced the scheme has changed substantially. This has made the process of raising equity capital to support the scheme conditions significantly more challenging than expected."

At 0830 GMT, the shares were down 37% at 2.46p.

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