June 9 (Reuters) – Troubled British subprime lender Amigo Holdings (AMGO.L) said on Friday it had granted shareholder Michael Fleming an exclusivity agreement to look for financing options, including debt.
Amigo said in March it would wind down after failing to raise sufficient funds to continue, having been pushed to the brink of collapse by the cost of compensating past customers for mis-sold loans.
The company said the agreement would not stop it from progressing with the disposal of assets under its wind-down plan, under which there is no expected residual value for shareholders.
But the news still prompted the company’s share price – which had dropped to pennies from more than 3 pounds a share in 2018 – to rise as much as 260% to 1.2 pence by 0931 GMT.
The exclusivity agreement with Fleming expires on Sept. 6, during which Amigo cannot borrow funds from any other source. Fleming’s stake in the company was not disclosed, but is understood to be less than 3%, below the threshold under UK shareholder disclosure rules.
Amigo, which specialises in providing credit to borrowers typically excluded by mainstream banks, had previously tried to secure 45 million pounds ($56.45 million) of capital from investors as part of a restructuring.
However, it struggled to garner enough interest before its regulator-imposed deadline of May 26.
The company said it saw a very low likelihood of a successful conclusion to any discussions arising because of the agreement with Fleming.
“Establishing a new business and potentially creating value for shareholders in the longer term has significant execution risks and will require regulatory approval,” the firm said.
Amigo reported a loss before tax of 21.3 million pounds in its nine months ended Dec. 31.
($1 = 0.7972 pounds)
Reporting by Sinchita Mitra and Eva Mathews in Bengaluru; Editing by Rashmi Aich and Jan Harvey
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