Amigo Holdings PLC (lon:amgo)
Amigo – Does BrightHouse’s Closure Also Spell The End Of Amigo?

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Amigo Holdings PLC Share Price
Grade:The Pink Grade - A Pure Slightly Informed Gamble, The Market Doesn't Like The Company But I Think That I Understand Why.
Title: Amigo – Does BrightHouse’s Closure Also Spell The End Of Amigo?
Company: AMGO - Amigo Holdings PLC
Share Price Then: 14.8p
Author: Ian Smith
Date: Tue 31 Mar 2020
Comments: Amigo has recently said they are suspending new loans to all but key workers. Taken at face value this sort of makes sense as making credit worthiness predictions has to be difficult if you have no idea about the effects of the government’s COVID-19 measures.

But does it indicate anything else?

Recently there has been a big spat between the founder James Benamor and the board, the basis of this seem to be that the board has set in place a policy to make loans that Amigo knows are unaffordable and does not care, simply using the business to get money while the “going is good”.

Of course the board denies this.

It is possible to see this no new lending as the start of winding the business down either to nothing or to a loan book of known good and bad loans to be sold.

The confusing bit for me is that Benamor is still believed to own 61% of Amigo’s shares, so he stands to lose a lot.

Brighthouse, the store that sell goods at very high interest rates has just gone into administration and many of the payday lenders have gone as well. Although Amigo’s model is different they all share the same very high cost of borrowing and a regulator who seems to be starting to side with the borrowers.

At 15p it seems pretty clear that nobody is sweeping up any dirt cheap shares on offer prior to making an offer for the business.

The only saving grace that Amigo has is that it has the ability to file with credit reference agencies non payment records against the guarantor if they are required to make payments and don’t.
Read Count: 518/10119

Buy/No Buy In A Nutshell
NegativesA combination of making risky loans and an unwillingness to tell complainants and regulators that the borrower and guarantor has the majority of the responsibility as they asked for and accepted the loan. Claims companies have joined tge bandwagon.
PositivesNew management could get much more aggressive with people complaining that they asked for and were given loans but they can't afford them.
Initial Review Price7p
Last Review Price9.3p
Last Review Date20-Nov-2020
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