Troubled lender Amigo Loans has said it has been handed a small lifeline as it battles for a survival which is looking increasingly unlikely.
The Bournemouth-based company is in the process of winding down ahead of being liquidated, having halted all lending in March. The firm had been facing financial difficulties after being ordered to make compensation payments to former and current customers over historical complaints.
After it was unable to meet the terms of a High Court scheme, Amigo said it had been forced to use its "fallback option" and would wind down the business and use the money to pay off customers it owed.
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On Friday (June 9) the company said it had signed a new “exclusivity agreement” with shareholder Michael Flemming. As part of the deal, Mr Flemming has the right to explore new options that could find new loans for the company - which could save it from collapse.
Amigo said Mr Flemming will be able to potentially put together an 11th hour proposal for the business before September 6.
Bosses said: “The board recognises the very low likelihood of a successful conclusion to any discussions arising because of this agreement but is pursuing the agreement in line with its duties.”
Shares in Amigo shot up by 120% following the news. However, they had previously been at historically low levels.
The company’s board added the new agreement would not not stop the firm or its subsidiaries progressing with the disposal of assets under its wind-down plan, or acting on any approach governed by the Takeover Code.
It warned: “Shareholders should note that there remain significant impediments to any new capital being made available to the business. In addition, establishing a new business and potentially creating value for shareholders in the longer term has significant execution risks and will require regulatory approval.”
Last month Amigo announced its chief executive Danny Malone would step down after a six-month notice period, to ensure the continuation of the solvent and orderly wind-down of the business.
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