Are we live? Right. Good morning and welcome to Amigo's general meeting. To everyone here in Bournemouth and to those on Zoom joining us remotely. I'm Jonathan Roe, Chair of the Amigo board. With me here today is the board of directors. That is, to my left, our Chief Executive, Danny Malone, and to his left, our Chief Financial Officer, Kerry Penfold. We have our Company Secretary, Roger Bennett, at the far end. To my right, we have Maria Darby-Walker, our Senior Independent Director, and Jerry Loy, another Non-Executive Director. Somewhere in the Zoom ether, we have Michael Bartholomeusz, who sends his apologies couldn't. He was unable to make it today.
Jonathan, I think people can't hear, can they? Can I suggest people move over to this side so that they can hear. Sorry.
Is that right? Apologies.
Thanks.
I shall try and project. Do you want me to start again or welcome. A few quick housekeeping points. May I please remind you to switch off your mobile phones. For those with us today in Bournemouth, the emergency exits can be found in each corner with a door. As we have a quorum in the room and it's past 10 o'clock, I now declare the meeting open. The purpose of today's meeting is required by Section 656 of the Companies Act to address the matter of the company's net asset position relative to its called-up share capital.
Specifically, where the value of a company's net assets is less than half of its called-up share capital, the directors are required by the Companies Act to call a general meeting to consider whether any, and if so, what steps should be taken to address the situation. We've been very clear with shareholders on our capital position, which arose as a result of a significant number of complaints received relating to historical lending practices, and the steps we are taking, and have already taken, to address this. We did this through market announcements, other shareholder updates, and results day presentations, as well as at our AGM. We did not call a general meeting specifically to discuss the net asset position of the company on a non-consolidated basis, which we should have done.
This was an oversight on our part, due primarily to the key focus having been on the business at a consolidated level. It's a technical point, which we are going to remedy at this meeting. In a moment, I will hand over to Kerry to discuss the company's financial position in more detail. Danny will then outline the steps we are taking to address this situation. Finally, before we close the meeting, we will open the floor to questions. First, before I hand over to Kerry, I would like to read to you the update we issued to the market earlier this morning. For those in the room, you will find a copy of the announcement on your seat. What we said this morning on RNS was, since the release of the quarterly results on the 23rd of February 2003...
2023, sorry, there has been no material change in the trading activity for the runoff legacy loan book. Demand for the new RewardRate brand remains strong, the conversion rate is improving but remains challenging, The current run rate for monthly originations remains in excess of GBP 1 million. As noted in the Q3 results, lending to date has shown that the conversion rates are higher with a non-guarantor product. Until Amigo has completed a capital raise, the board is focusing on the most efficient use of capital. Given the higher acquisition cost per loan of the guarantor product and the higher conversion rates for the non-guarantor product, the decision has been taken to temporarily pause the guarantor loan offer. The board remains confident in the long-term viability of the guarantor model.
Amigo also reports the exit on the 28th of February 2023 from its loss-making Irish business. The Ireland business ceased new lending activities in 2020. You say that one. While conversations with potential investors to underwrite a GBP 45 million equity raise continue, Amigo has yet to secure the full amount required, and the situation remains extremely challenging. As disclosed with Amigo's Q3 results, non-binding indicative interest for between GBP 10 million and GBP 15 million of equity and GBP 10 million of exchangeable notes has been received. Under the terms of the scheme, if and as soon as the board expects the capital raise will not be successful, it is legally bound to switch the scheme to the fallback solution, which is an orderly wind down of the business. Thank you. I'll now hand over to Kerry.
Thank you, Jonathan. As outlined in the company's 2022 annual report and accounts, at the balance sheet date of 31st of March 2022, the company, that is Amigo Holdings PLC legal entity had net liabilities of GBP 43.7 million and called up share capital of GBP 1.2 million. This meant that the company's net assets on a non-consolidated basis were less than half of its called up share capital. It's important to note that this is on a non-consolidated basis. At consolidated level, on the 31st of March 2022, the Amigo Group had net assets of GBP 47.9 million. In our recent Q3 results, we announced net assets at 31st December 2022 of GBP 26.6 million. The standalone company financial position is due to the impairment, the carrying values of subsidiaries in the accounts.
Under International Accounting Standards, when there are indicators of impairment, such as a lower share price, the company is required to carry out an impairment review of its investments. Given the uncertain nature of the future value of the Amigo Loans Ltd, as reflected in the director's assessment of going concern, this review resulted in a write down and consequently, the negative net asset position presented in the 2022 financial year accounts. It is therefore not a new development, and as Jonathan has said, one that has been flagged many times in our market announcements. It should also be noted that whilst the impairment review requires an element of estimation and judgment, the requirement to undertake the review is clearly signed. The value of net assets of the company continues to be less than half of the company's called up share capital.
The share price continues to act as an objective indicator of impairment. In line with our Q3 assessment, pending successful completion of the capital raise, the group's ability to continue as a going concern remains uncertain. I will now hand over to Danny, who will go through the steps we have taken and are taking to address the company's financial position.
Thanks, Kerry and Jonathan. Good morning, everyone. The board has done a number of things to address the company's financial position. Most importantly, the board proposed a scheme of arrangement to cap the amount of redress payable to creditors with complaints related to past lending. In May 2022, Amigo scheme was sanctioned by the High Court. The scheme is the most equitable way for Amigo to ensure that all those with valid complaints receive redress. It enables Amigo to maximize redress by trying to continue as a going concern. We are also seeking to raise additional capital. As part of the scheme, a 19-to-1 capital raise must be completed by May 26th, 2023.
This will not only provide a further minimum GBP 15 million of redress to scheme creditors, but also recapitalize the business with GBP 30 million of working capital, which will support ongoing operations. It is critical that we raise the full GBP 45 million. It is not possible to raise only the GBP 15 million by the scheme deadline and more at a later date. This is because all net assets from the legacy loan book are committed to the scheme. Once this is paid, without the additional GBP 30 million raise, the business would have no equity funding to continue. Moving to slide 9, I'd like to give a little bit more detail on the steps we have taken to secure funding and the steps we still need to take to complete the capital raise. We have approached nearly 200 potential investors.
This has been done via a variety of introducers, not just our two primary financial advisors. The executive team and I have held many prospective investor calls and meetings. Far, as we said at the time of our Q3 results, we have received non-binding indicative offers of between GBP 20 million to GBP 25 million. This consists of GBP 10 million to GBP 15 million of equity from a combination of potential investors and individual existing shareholders, plus GBP 10 million of exchangeable notes. That is debt that can convert to equity. We have also received term sheets for the debt facilities required. Conversations to underwrite the remaining capital required are ongoing. The timetable to successfully complete the capital raise by the 26th of May deadline is very tight.
As of today, with conversations ongoing, the board believes it is achievable, but we must be clear that the funding gap is large and our options to fill that gap have diminished significantly. On the basis that we can raise the capital required, I want to touch on what the next steps would be. We need first to convert the potential offers of interest to binding offers. Once we know the final structure of the capital raise that we will propose to shareholders, we can finish drafting the prospectus. It will then need to be approved by the FCA before it can be issued to shareholders. We cannot put a time on this, but we believe that the process can be completed in time. Once the prospectus is signed off, the offer can be announced to the market and the prospectus issued to shareholders.
At the same time, notice of the general meeting to approve the raise can be issued. A minimum 14 days must be given before the general meeting takes place. At the general meeting, Amigo will require over 75% of those that vote to vote in favor of the capital raise for it to proceed. There would also be an offer period during which shareholders can now elect to take up their preemptive rights. As we have said, the structure of the capital raise has not been confirmed. This needs to fit with the profile of the ultimate underwriters of the capital raise and will therefore only be known once all conversations with potential investors have finished. The minimum 19-to-1 dilution is mandated by the scheme and will be a part of the final structure that will be put to shareholders.
We also need FCA approval for change of control for anyone acquiring more than 20% of the share capital. This process normally requires at least 3 months, we are hopeful that the FCA may be able to accelerate the process should a controlling investor by this definition emerge. Clearly, we cannot commence this application until we have identified potential controller. As you can see, we may have time, it is very tight. With consideration to this and the cost involved, if at any time the board expects that the capital raise cannot be completed successfully by the scheme deadline of the 26th of May, it is legally bound to terminate the process with immediate effect and switch to the fallback solution, which is an orderly wind down of the business. This could happen any day if all investors drop out and there is no viable replacement.
As a board, we are grateful for our shareholders' continued support and patience in what is a very difficult situation. We have a strong belief in the business, but we can only take it forward if we can secure the equity funding required. The board is exploring all options to achieve the best outcome possible for all our stakeholders and to rebuild a strong business for all. I will now hand back to Jonathan to invite questions.
Thank you, Danny. We'll now open the floor to questions, including to those joining us remotely. If you wish to ask a question, please can you wait for the microphone to arrive before doing so, or raise your hand using the Zoom function if you're joining us online. Let's start with people who are here in person, and thank you for attending. Do you have any questions?
One shareholder. Can you explain to me the process of engaging with existing shareholders to take part in the future?
There are a number of sort of shareholder groups of which we have a representative to here today who have. We've been in active dialogue. It's very difficult with, I'm gonna say difficult to deal with retail shareholders. This is because of all the legislation surrounding issues of securities and that kind of thing. To actually raise the money we will have to issue a prospectus, which will give you all the details and all of the information about your preemptive rights, and preemption will be a key part of it. You can't. I can't say. You have to be given that information because you can't really be signing up to something you don't have the full information for.
There'll be future profit forecasts and that kind of stuff, and we've not published those yet. We can sit here today and say, "Are you okay for X thousand GBP?" It'd be inappropriate for us to ask you that question, and it'd be inappropriate for you to find that was a binding commitment, because the only binding commitment can come with the full prospectus. Does that help?
Thank you very much.
Any other questions? You can come back. We're.
So, uh,
Absolutely
Your right. Yeah, and that will require a special resolution and a 75% in favor majority.
Recently in RNS, it was felt that expected price to change to achieve positive value which is just about 0.07%, which would effectively guarantee this assuming it seems that holders of approximately nearly 90% of the votes will vote to dilute themselves by 0.07%. That assumption I find quite strange that you're even pursuing other things beyond that. In order for it to stand to see a new scheme without running into annihilation would guarantee its survival capacity. You would need this must certainly develop into annihilation. The shareholders would be above GBP 0.095, which means you've got a discount by the.
That's why, when we were seeking to get the scheme approved, and we have to remember we had a failed scheme, coming up for 2 years ago, one of the things that the judge and the FCA focused on was that in the event of insolvency, it would be normal for existing shareholders to be diluted, actually they said to 2.5% rather than the 5% that's in our scheme. That was mandated by it. We're fully aware that there is a chance that the shareholders who are unable or unwilling to support and follow their money may decide to close the business. In effect, they voted against it and the business is shut. In the event that happens, there is nothing left.
Shareholders will get nothing. I can't say that 5% is enough to persuade people who don't want to follow their money or can't follow their money. I can't say that's sufficient, but that is where we are. I do not see any scope for a new scheme which would change that to a 2 for 1 or any other rights issue. You might be aware that Morses Club was in the courts yesterday, which Nick can give you some information on. They were stubbing their toes on exactly the same issue. Nick, do you want to give a quick highlight? No, he doesn't want to give a quick high.
Okay. it's at negatives and it's [inaudible]
We don't take that observation lightly. We don't have a choice in the sense of being able to reconfigure it for being a 2 for 1 rights issue or anything like that. We just. The court scheme demands we do a 19-to-1. It is a risk. I fully accept it's a risk. At the moment, the risk is finding, giving shareholders the opportunity to allow the business to continue. The next risk will be the shareholders deciding as a collective body that they're not prepared to sustain that. At that point, they're looking at getting nothing. The company will be in rundown, wind off, and there will be nothing for shareholders. I'm not other than telling you that that is what the alternative is.
We're desperately trying to come up with the alternative to give you an alternative, as in raise the money and then put it to the vote. If the body of shareholders say, "We are not. We don't want to do that," then, there's nothing that we can do other than say, "You can have 100% of nothing or 5% of something," which is the normal kind of trivial argument you get. I can't, I can't change the math of it. Any more questions in the room? We... All right. Anybody's hand up remotely, as they say? Hello.
Hello.
Hi, Danny.
Hi. I've got so many questions, as you can imagine. Okay? Might as well start. Nineteen to one, I've obviously emailed as well, you've probably seen that. Okay. The nineteen to one dilution, I agree, shouldn't even be changing it, shouldn't even be up for discussion. It's a nineteen to one dilution. People need to get over it. Okay? My problem is the GBP 15 million that you're raising. This is a question to Nick, who didn't answer the last one. You were in charge of this restructuring originally. Didn't you think at the time that you wouldn't raise the money? When you came up with this, shareholders are gonna have to put GBP 50 million in the pot. What external advisors did you speak to say, how much do you think you're gonna get from shareholders? Not the nineteen to one dilution.
We're talking about the GBP 45 million that you're trying to raise and the GBP 15 million that you've put into the redress pot. How did you come up with the number that the shareholders should give GBP 15 million? It's a nonsense number. You were never gonna raise GBP 15 million from existing shareholders ever, right? You should have factored that in to your original scheme. Okay? I agree we can't do a 19-to-1 dilution, but we should be going back to the FCA to say, "Look, we haven't got GBP 15 million. We've spoken to 200 investors, and only a handful of them are even talking to us. We're not gonna get GBP 15 million. We need to change the GBP 15 million." The creditors aren't gonna get GBP 15 million, right? We haven't got it, right? Why are we not doing that?
Why is the board for months instead of keep talking. Jonathan, you've wrote GBP 45 million or Danny said GBP 45 million. I've underlined it critical. We'll talk about that in a minute because the GBP 15 million is going to redress. Okay? You can't raise it. It should have never been a set amount of GBP 45 million. If you're punishing the shareholders, it should have been whatever we get from the shareholders on the 19-to-1 dilution, the uptake, or it should have been a set amount. Okay? In theory, you haven't got it. Market conditions were completely different a year ago and a year and a half ago. You should be going back to the FCA to say, "Really sorry, FCA, we thought we could do it, we can't." Okay, we need to scrap this GBP 15 million.
We'll still do the 19-to-1 dilution so that the money raised from shareholders can go back into the new business scheme for future lending, overheads and so on. We need to wipe the GBP 15 million. Let's be honest, if you took the GBP 15 million out of the redress pot, the creditors would. You can answer this because you know the numbers. If you took the GBP 15 million out of the redress pot, the creditors would be still better off than the fallback scheme. Yes or no? Cause I know they would, and you know they would. I just want you to admit it to everybody on the call that if you took the GBP 15 million out of the redress pot, it'd still be better off.
Well, I mean, we have clear. I understand the sentiment, Daniel.
No, it's not a sentiment. I'm sorry. Yes or a no. Very simple, yes or a no. If you took the GBP 15 million out of the credited pot, cause you can't get it from shareholder, would the creditors be better off still with the new business scheme, pennies on the pound, than they would on the fallback?
They could be.
No, they would be, based on the numbers that you've got in front of you. Come on, they would be.
They could be better off. All of those numbers are based on forecasts, not on actuals.
Everything is. Your entire GBP 45 million is based on forecasts because you're trying to raise it, okay? The answer is pretty simple. They would be better off. Okay? Let's just talk about. We should have gone to the FCA, and we should have got this GBP 15 million removed. We should have said to them, "We're not going to raise it. Market conditions have shown us that." The fluctuating share price back in 2022 didn't blinking help us, right? We should be going back to them straight away and say, "Look, we can only be a viable. The creditors are not losing out if we don't give you GBP 15 million quid. We haven't got the GBP 50 million we thought we'd got, but they're no worse off, okay? We're still employing people. We're still paying taxes.
We're still a viable business." Okay? That's what we should be presenting back to the FCA. We're still gonna hurt and punish shareholders by 19-to-1 dilution. Right? We just haven't got the GBP 15 million. Okay? That's why you don't need GBP 45 million for a start. You only need GBP 30 million. Okay? We'll talk about the GBP 30 million, shall we? Which is just, again, crazy amounts of money. Let's talk about your GBP 45 million, but it has actually GBP 30 million if you get a rid of over GBP 15 million. How much is going to the overheads of the business, including director salaries? I notice, and I've said this on every call, some of you have got a few shares, right? You're not in it like we are, right?
I want to know why the board, like any other business person in the world, when a business is losing money, would take a reduction in salary. Tell me why you lot, why RTO hasn't.
Maria, do you want to deal with this?
Yeah. Thanks. Hi, Danny.
I know he doesn't have to.
Daniel-
Typically, if you are a failed business, you would take a reduction in salary.
Yeah. Daniel, let me answer. It's a fair point. You and Ian Johnson spoke a while ago, obviously on this very subject. We're also very conscious of, and we do pay attention to also discussions in the chat rooms on this issue. For the record-
I'm not on any chat rooms, by the way, so you know.
No, no, but if you could let me finish the question. answer the question, sorry. Danny's salary is GBP 355,000. that's a reduction from, as you know, Gary's salary, which was GBP 600,000. Kerry has also taken a reduced salary from what Danny was on as CFO. that's gone down from GBP 355,000 to GBP 220,000.
355? Okay. All right.
The Neds are also, from the first of April, taking between 40%-50% reductions in salaries as well. We recognize that ongoing, we have to be the right size for business, whether that's remuneration, whether it's overheads or it's expenses. Kerry in particular is focusing on those issues with respect. I guess the message is, you know, we don't want you to think we never listen, don't listen. We do listen. We have taken action.
Maria, If I may, okay.
Yeah.
GBP 350,000 for a failed business. You're a startup. You've told us so many times you're a startup. You're not keeping a business anymore. It's ridiculous. There are cardiac surgeons saving lives, earning less money, right? We've got a board running a failed business that's spoken to 200 investors and can't find the investment, right? Collectively on over GBP 1 million worth of wage bills. That's more than the Prime Minister of England earns.
I recognize that.
You think that's acceptable. It's crazy. Gary's salary was an absolute blinking joke, right? An absolute joke because he was just keeping the lights on, and I fear you lot are still keeping the lights on because you're only GBP 35,000. It's ridiculous. How many staff have been made unemployed because you've got no business, right? This is the other thing. How many staff still work for Amigo, and why haven't you got rid of them if you don't need them because you're a startup? Stop thinking we might need them in the future. The redress scheme should be paying the redundancies on those staff, and that should come out of the redress pot. How many have...
I'm on about not prior, I'm on about in the last 12 months, how many have you got rid of and how many have you got now?
Daniel, if I just may, just on costs. We are a startup business and RewardRate, but we are still collecting out the legacy book. We are also running a scheme. All of that requires staff, and those staff are paid for by the collections from the legacy book, so therefore effectively out of that redress pot.
That's great. I'm on about moving forward, your GBP 45 million you're asking for, I'm trying to work out where you need that. Okay. I've already established, basically, from what you've told me, that you've got GBP 1 million odd worth of directors. You've just told me on the call. Roughly there's GBP 1 million odd in directors' money of the GBP 45 million for the next 12 months, right? How many staff have we got to absorb as part of that GBP 45 million? If you are a new business with only generating over GBP 1 million a month, you don't need a lot of staff. Right? The legacy stuff I'm done with. It's over. I'm all about moving forward. I'm trying to get this GBP 45 million down. I don't think you need GBP 15 million for creditors.
You just need to go back and say, "We haven't got it." Right? You're still better off if you don't do the pullback scheme. Okay? We still get hit with the 19-to-1 dilution. That's fact. That's what we presented to the FCA weeks ago. Okay? You've got proof because you spoke to 200 people, 200 companies that don't want to invest, right? You've got proof to the FCA that you can't get investment. It's not like you're going and pie in the sky. Let's just go back from when the new business goes live, then, how many people are you gonna transfer over from old Amigo to the new business scheme?
That process is ongoing, and we have sought to not bring new people into the business, but redeploy those staff as the legacy book transfers out and we start up the new business. That's a sensible thing for us to do. It means we have trained employees, we don't pay recruitment costs. At a sensible and efficient, and a benefit that we have in RewardRate. We will continue to do that, redeploy staff where we can.
Okay. Who will get hit with the redundancies, as in like the creditors? Will the creditors' part, will they get hit for the 100 odd thoughts you're looking to see you've got to pay? It shouldn't be us. That's what they voted for. I'll go on to the next question in a minute, but they voted for a new business scheme. Second so, they said, "New business scheme." That comes with the associated costs of a new business scheme. They didn't vote for wind down, which would have been redundancies and so on. Okay? They voted for the new business scheme.
I don't understand as well why in that new business scheme you didn't have numbers in there to say, "We're going to need 12 months worth of running costs of GBP 15 million," or something like that, inside that new business scheme proposal, or your running cost for 12 months.
We.
Why wasn't it included?
It is. It's within the turnover amount. The turnover amount takes the collections from the legacy scheme and deducts the cost of the legacy business. you know, the cost of the legacy business are covered within that.
That's the same with the wind down. That's the same with the wind down.
Uh-
That's not future business. That's just covering your cost of old.
Yeah.
That's why you're trying to raise GBP 45 million from us.
No.
Because you need that to run for the next 12 months. Under guidelines, you need 12 months worth of money. You've told us several times you need 12 months' worth of money.
Yeah.
-to make it viable. What I'm saying is, when we did the proposal for a wind down scheme or a new business scheme, the wind down scheme had the associated cost of staff redundancies, getting out of IT systems, getting rid of the directors, paying everybody off, and so on. It had associated costs in that number. Okay? What I'm trying to say is, in the new business scheme that you proposed and they signed off, why wasn't there an element of funds to come out of the redress pot for the new business scheme to run for 12 months?
I've just told you there is. It's called a turnover amount within the new business scheme. The turnover amount.
how much is. Okay. the turnover amount, which is an.
No, no.
It is.
The cost of the legacy collections and the cost of administering the scheme are deducted from the income from the legacy portfolio, and the net amount is passed to creditors. It's still a positive amount based on forecasts. The costs are being covered by the legacy collections. That is part of the scheme, the new business scheme.
Okay. Until when?
All costs, up until July this year, for the whole company, excluding those that are specific to RewardRate, which is primarily underwriters, and all direct costs beyond July, of legacy collections and the scheme.
Right. actually the pullback scheme, they could just be... The longer it takes, the less money they're gonna get then? Basically.
Not necessarily.
Oh, if it drags on and drags on and drags on and you've got more staff to pay, then there's less money in the pot, isn't it?
Yeah. There's lots of moving parts. It depends what you're doing, you know, during the drag on, whether you're selling off some of the assets or collecting them as yourself. There's lots of.
We'll go back to my first question. Why have we not gone back to the FCA to get rid of the GBP 15 million?
We have clear instructions from the court and from the FCA.
I mean, we Listen, that's what the scheme 2 was. Right? They approved that. We know that.
At
Why aren't we going for a new team, a scheme number three, to say, "Look, we've done the FCA fine. We're back to lending. The market conditions are completely different than what they were and"?
The market conditions aren't different. I accept that.
Shareholders have already been hit with like 95% anyway. We're gonna give them a 19-to-1 dilution. We've spoken to 200 odd investors. We've raised this money, right? It's all to do with this GBP 50 million, because there's a GBP 50 million debt in there. Any new investment, GBP 50 million has got to go to the creditors pot. If it's from shareholders or it comes from a new investment, it's got to go in. That's why people are reluctant to do it. Why hasn't the board gone... I don't care about what scheme 2 was. I don't care about what scheme 1 was. All right?
I care about what we need to do to make this move forward. That is a reasonable expectation of everybody. I think all the shareholders would actually say, "All right, we're gonna get hit with the 19-to-1 dilution. That's what the judge wanted." All the other cons in it are down to what Nick told them originally in the scheme. We would raise GBP 15 million. It'll be all right. It's what Gary told them to keep his GBP 600 thousand salary. They were made-up numbers. They never even existed. They were forecasted numbers. You forecasted the numbers to get scheme 2 approved. You need to go back and say, "These aren't forecasts anymore. These are real numbers. These are facts. We're not gonna get the GBP 15 million." You should be going back for a scheme number 3.
The FCA should hopefully see sense, right? They've already let you off the fine. They know there's an area in the market for you. It's proven that there is, okay? We've already been diluted 19-to-1, and you've got evidence you can't raise the GBP 45 million, so what do they want? Like I say, the creditors aren't worse off. The FCA is about as long as the creditors aren't worse off, the creditors group are gonna say, "So long as we're not worse off." All you need to go is to the FCA. If the FCA approve it, then the judge is gonna approve it as well. You're not doing anybody any harm. You haven't got the GBP 15 million. Right now, any day you keep telling us, right? Any day you could go straight back to fallout scheme.
Well, that ruins every shareholder, it ruins all the creditors, and so on. All I'm saying is why doesn't somebody make a meeting with the FCA with everything on the table and say, "We haven't got the GBP 15 million"? It's very simple. I'm sorry, Danny, I'm paying you GBP 350,000 a year, you should be doing it.
Well, whilst we still have investors who are potentially gonna pay the whole amount, including the GBP 15 million.
Is that what you think? Okay.
Yeah.
You've just told us this morning you've only got, what is it? 10 for 15. You haven't got the 45. You've just told somebody else in the audience, you don't know how much that they're gonna raise from existing shareholders. You haven't. You've got potentials.
Yes.
Whilst you've still got potential. Again, we're talking hypotheticals again, exactly like you got scheme two passed on hypotheticals. 90% chance is you haven't got the money. You should be going to the FCA and saying, "Look at the stat, Danny. As we've spoken to 200 investors, right? And a handful, 2 or 3 have signed up. We don't expect to raise GBP 15 million from shareholders." Right? The FCA know this. That's why they let you off a GBP 70 million fine. It's nonsense to be saying, "Well, we don't know." You don't know. That's the fact. You don't know. I'm telling you should be going to the FCA with what you do know. That you haven't got the money right now. You need to be open and honest to shareholders.
You need to be open and honest to the FCA. Stop ticking the ball down the road. It's getting annoying for every shareholder.
To be clear.
All right? You're on GBP 350,000 a year. I want to know why you're on twice as much as the Prime Minister, you can't go to the FCA.
We have clear instructions from the court and the FCA that while the GBP 45 million is viable, which we currently still believe it is, based on discussions with potential investors currently, that we should not try anything else. We should not try to change it.
Well, Danny-
If Sorry, bear with me, Danny. If those conversations fall down, then we are open to approaching the FCA and having those conversations. They will not welcome those conversations whilst potential of raising the full amount is still there.
to be clear.
Right.
Conversation with the FCA. This is a court-approved scheme. We would have to go through a legal process, and the decision is actually in the hands of the creditors, whether they accept a new scheme or not. It's not a case of having a conversation with the FCA. This is a very difficult and complex legal process should you look to change.
Hang on a minute. You've had months, you knew what was going to happen months ago. You guys came up with this original 2.0 scheme. Do you know what I mean? You knew what we were up against in the first place, or you should do for that sort of money. The point is, yes, you would need creditors' approval. We know that, okay? If the FCA was to say, "Actually, yeah, you've shown you haven't got the GBP 50 million. You've shown that the creditors aren't worse off." You'd be going to the creditors group, which let's be honest, you know them all now because they've all put redress claims in. It's easier for you to contact them now than it was before. A lot easier, okay?
You could be going to the judge quite easily with the FCA helping you, right? The creditors group. There's no way a judge is gonna go, "Well, the creditors group and the FCA." Do you know what I mean? That's not gonna happen because you're keeping it anyway. Right? It's a lot easier than before.
It depends on many things. You know, the creditors may well accept it, but if the FCA object to again, as they did to the first scheme, then the creditors and the judge may not accept it.
Right. Let me get my timeline right then, okay. You lot got May to sort this scheme, to sort this funding out. Okay? Now you're telling me if May doesn't happen, don't worry, we're not gonna have to go back to the FCA. We're gonna negotiate with them again. They told us that they wanna hear about what you just said.
Yes.
Can I tell you?
To decide whether anything is [inaudible]
Daniel, you should know what's going on [inaudible]
Daniel, well, not surprisingly, there is you would expect to, and you're rightly asking the question about dialogue with the regulator. We are in touch with the regulator. I think they're looking at it weekly. Please, and we can't always communicate that. Please don't think that they don't know where we're at or what our thinking is.
Listen, I know. Listen, I know they do. Right? Trust me, I know they do. That's why I don't know why you haven't said to them, we can't raise the GBP 50 million. We thought we could. That's why we put the team together and you approved it and sanctioned it. The FCA, I'm sorry to say, has an obligation here themselves, because they pushed you, they pushed the shareholders, and they pushed you to come up with a second scheme, right? Which wasn't a feasible scheme. They didn't agree with the first one. They thought you got money in the pot. You went in with the second one, right? All intents and purposes, you might have thought you'd have got the money, right? You didn't, right?
They're obligated just like you are, they rejected the first scheme, and so did the judge, right? Trying to push for more money, right? To be honest, they've got an obligation to at least look at scheme number 3, because scheme number 2 isn't not because of your problems, it's because they took so long to go return to lending. It took so long about talking about the fine, right? Nobody knew what was happening. The share price has absolutely tanked since, and we basically entered a recession. They've got to have open dialogue about the possible scheme 3. Right? A lot of it... Do you know what I mean? It's not just Amigo's fault. You've kind of, you've stuck to what you said, market forces have created the situation you're in.
It was the FCA that pushed originally for scheme two, and it just isn't feasible. Just go back to them and say, "We'll still, we'll still accept the 19-to-1. We'll still accept the creditors are gonna get hurt," like as in the creditors are still gonna probably get an extra couple of penny in the pound. All right? We just can't raise the GBP 15 million. That's stopping us from the shareholders' money, because then whatever you do in the dilution, it goes towards what you need for future business or future lending. Right? It helps any new investor. They're not talking about a GBP 15 million debt anymore. Then you have a viable business proposition. It's silly that we've been talking about it for weeks and months.
Yeah.
All right? Guys, that's what I'm sorry to say. I'm just saying open the door with the FCA. Don't wait for them to come to you or wait till the last minute. Go to them now and say, "This is the situation we're in." They know it. They're waiting for you to speak to them about it. Right? The longer you wait, it's just dragging out the times of things. Right? It at least shows the shareholders that you're try--. All we wanna see is that you're actively trying.
Dan-dan-daniel-
I know you can say you are, but we need to see it.
I think, Daniel, you have to imagine, and that we are doing everything that we can think of to deal with this very difficult situation. The FCA are very difficult about statements about themselves. That is what we are doing. I can't tell you anything more than that. We hear you very loudly and very clearly. We also fully understand our own duties to find our way out of this hole. I would like to close this call. Hello? Can I?
GBP 50 million. The GBP 50 million.
I can't hear you, Daniel. Sorry.
I think I've gone. My signal's gone.
No, you haven't.
Can you hear me now?
I think you're back. You're back.
We can hear you again.
I was just saying, you must admit it's a GBP 15 million unless you could go to you could take your advisors to the FCA. It's the GBP 15 million pounds that's killing you. It's killing you with current shareholders, it's killing you with your future lending, everything, right? Your advisors, your financial advisors that have gone to market, would be telling you, if we went to market without this GBP 15 million pound debt or shares or whatever nonsense you come up with the GBP 15 million quid, the point is, it's hindering your ability to raise the GBP 45, you don't need to raise GBP 45 anymore. If you got rid of the GBP 15, you'd only need to raise GBP 30. You've already said you've got GBP 10 in what's it called? You're actually only needing to raise GBP 20.
Yeah. No, we-
Your future. It's a no-brainer. The business survives.
Daniel, we acutely understand everything you are observing and share that, and it's part of our, if you like, part of our thinking without any commitment to say.
All right.
We're not trying to do everything that. Sorry. We are trying to do everything that you are thinking about and wishing for, but we can't make public announcements about, we've done this, we've done that, we've done the other, because of sensitivities. We are very much on the case of trying to work our way and come up with a solution.
Okay. All right. I have to jump because I've got another call, but okay. Thank you, guys. Thank you, everyone. Bye.
Okay. Thanks, Daniel.
Thank you, Daniel.
Have we got any other-
Any other questions?
-questions?
Anybody else in the room would like to ask more?
Hello, can you hear me?
Hello. Yes. Yep.
On the phone. Oh, yeah. Just a question when we talk about timelines. I think you mentioned something like 14 days. Is that business days? Because obviously I'm conscious we're approaching a period where we're having a lot of bank holidays. Just that's going to impact on. You know, we're 11 weeks away. When you factor those in, you're losing a business week.
The rules normally talk about 10 business days, which we shorthanded to two weeks, including the weekends. You're right. We're also aware of Easter, May bank holiday, et cetera, et cetera, et cetera, that will take days away from us unhelpfully.
Okay. Just a quick final point and just a simple one, but are management considering their positions post any successful raise? I mean, I ask because I appreciate market conditions, et cetera, have impacted the potential, as Daniel was alluding to, the frustration is probably felt, but I feel some fault has to potentially be accepted by the board. Just wondered if that's a consideration post any raise going forward?
Well, I mean, very short term, as Maria said, we have all agreed to take cuts. Well, the non-executive board have agreed to take cuts in their pay.
I mean, not pay, sorry. I mean, just, you know.
Uh, mo-
-confidence to run this business moving forward, given how sort of performance has been from management. I personally don't feel confident that the people there right now could make Amigo successful. Should I invest any money in a potential raise? Do I feel you're the right people to get me a better return on that? Not at the moment. Just that question there.
Well, I mean, all I can tell you is.
I believe in the business, just not in the management.
We have a completely new suite of executives. You've got Danny and Kerry who are board members, but you've got a whole of ExCo who actually have their hands on the tiller day to day are new. If I'm honest about it, we've got a better set of people running the business than in a way the business deserves. That's a slightly curious thing to say, but we have very high quality people working hard to make the best of what we've got. It's not down to Danny and Kerry. There's a whole team of people that are putting their shoulders to the wheel to make this happen. It would be I can't...
You know, life will evolve as it evolves, but I don't have any loss of confidence at all in terms of the ability of the whole team to make the best of what we've got.
Okay. Thanks.
Mike.
Hello?
Hi. Can you hear me?
Yes.
Yeah.
Good. With reference to the previous person, and his comments, I think it's important as a shareholder to make it clear that I do recognize the quality of the people sitting in front of me on the screen here, who were not responsible for getting the company in the position that it's in, you know, currently. Clearly all have an exceptional track record of success in this type of industry. I have no doubt at all that you're aware of your reputations and would not be involved with Amigo were it not for the fact that you believe in the business and your ability to make it a successful company going forward. You wouldn't want to risk all the good work that you've done in building good reputations over many years past. Only to see this business fail.
Certainly, as far as I'm concerned, and several people who I'm aware of as shareholders in the company, you have our confidence going forward, both as the executive board, and in the business itself.
Thank you for that. I wholeheartedly share that view.
Good. If I could just ask one other thing that occurs to me. Is it possible that the scheme of arrangement and the capital raise are being slightly confused? I understand the reason for it, nevertheless, it occurs to me that where you have, albeit non-binding commitments for, I think you said, GBP 25 million, up to GBP 25 million of underwriting. It's not the money, it's the underwriting. That is more than sufficient to satisfy the requirements of the scheme of arrangement, which requires GBP 15 million to be raised, failing which, the wind down, you know, option would come to the fore.
Under circumstances where in excess of GBP 15 million is available to be raised, would it not be, you know, possibly more sensible to do whatever is necessary in order to establish the fact that the company has met its obligations under the terms of the SOA, and is now a viable business that needs to raise further capital going forward, rather than being a business that might need to go into wind down anyway.
The issue for me and indeed for all shareholders is if we were to raise GBP 15 million, give it to the scheme creditors, we'd have nothing left in the tin to run the business. That may be not true in the next fortnight, but we would not be a going concern because we need the other money to run the business, the working capital to pay for the inevitable J-curve of losses as the new business takes hold. You would be putting or I would be putting my own money into a situation which can't be sustained, and I've said before that's not a situation that I would recommend to anybody. I know it feels a seductive way out, but you could find...
We could find ourselves putting GBP 15 million in, and then, a week, 3 months later, we can't raise the other money, and we have to shut it. That's not a clever place to head to.
Right. Okay.
I understand why you say it. I mean, don't get me wrong. It's not something we've not thought about, but it's just... You... It's difficult in the public markets to raise money on the drip, and because we don't, we don't have a big PE backer who can do that, we have to go in for big wallops, and we then have the rule, the prospectus rules on working capital, which has an 18-month run, and there's all kinds of things which follow that. You put yourself at immense peril if you solve the problem for the next 3 months and then you still can't raise the money because you've wasted GBP 15 million.
It's just a case of getting beyond the stage where fallback becomes mandatory. If the GBP 15 million can't be raised, it's, you know, this confluence is the SOA requirements to raise GBP 15 million by May the 26th. If it can't be raised, then fallback occurs. You know, but if GBP 15 million is raised, then the equation that says that fallback must occur is taken off the table. That being the case, I would think that there would be greater positivity as far as attitude or potential investors or lenders or whatever we're concerned to put the money into the business that it needs.
There you hit on one of the other key elements in that, we can only raise debt if there's an equity buffer in front of the debt. The term sheets we have for debt wouldn't be there in the GBP 15 million. If we did a naked GBP 15 million raise given over to the scheme creditors, they'd say, "Well, we're not gonna lend any money in that situation.
Oh.
It's a package that needs to be presented for to them.
The people who have indicated that they, you know, might be able to put in the GBP 10 million-GBP 15 million, wouldn't want that money going straight out to creditors and nothing going into the business.
Yeah, that's fair point. It. We have thought about it and not kind of casually dismissed it. It doesn't. We can't get it to work.
Mm-hmm.
Yeah.
Going back to the comments that were quite forcefully made by Danny earlier, it could potentially be the case, and you know, this is me thinking on my feet. It could potentially be the case that a discussion, you know, could take place on the basis that the scheme, based on the current situation, what you know currently, should have been that GBP 45 million has to be raised in order for the scheme to go ahead rather than GBP 15 million. It's market conditions, and it's the apart from anything else, the considerable reduction in the share price from where it was at the time of SOA one, you know, at 30P, you know, down to the current share price of 2.5P. You know, that isn't helping the situation. You know, we're in a recession.
There are more people that need Amigo today than ever. it's in everybody's best interest, the creditors and the FCA and the government, to see this company survive and be available to serve the needs of the people that, can't borrow from mainstream banks. I would think that there should be an understanding attitude from the point of view of the FCA and the High Court, to dealing with the situation as it is today.
I agree that's what they should do. How susceptible they are to that, I don't know. The court will be entirely focused on looking after scheme creditors because it's an insane situation. The FCA does have obligations for competition and ensuring a good market out there, but it has very few tools to make that happen. It's kind of, we've seen out in the marketplace a succession of higher APR lenders kind of faltering. Faltering for their own frailties for bad practices in the past. The landscape, competitive landscape looking forward for ourselves is very open. We have the new challenges of doing affordability really properly, which I don't think any of our competitors are really facing into at the moment.
We've got the new Consumer Duty, which I'm worried about vis-a-vis what might happen with claims management companies and the rest of it because the FCA, whilst they regulate them, though not all of them, there are solicitors who do the same thing. They have not shown much ability to control them. There's a few worries out there that I carry with me today about the long-term future. More openly, we 100% believe there's a need in the market for products like RewardRate, which I struggle to say. There's a big pent-up demand, but at the moment our potential customers are on a slippery slope of inflation from all known angles.
When you look carefully at their affordability, that becomes harder because they are looking at rising costs, and at the moment, those rising costs aren't being matched by increases in salary. Now, that will invert at some point or catch up, but that's one of the difficulties we're facing. Our potential customers do not have much resilience to shocks and downturns and, and those things. That is a sorry state that the whole country is in. That's the majority of the population. It's not a, it's not an isolated pocket we're aiming at. The number of people, there was a report from KPMG which said that 28 million, rather than the normally quoted 15 million people, were in real difficulty. We are sensing that from the early doors responses.
There's lots of demand, but we can't fill in the demand because the affordability doesn't work today. Years' time, we expect it to work, but today it's difficult.
Sure. We're talking about a business that needs to be there for people today and in a year's time. Where the APR that is now being offered by RewardRate is competitive in the context of credit unions.
Yeah.
Many credit unions, and far more competitive than the rates offered by CDFIs. In many instances, both of those organizations are perceived as being the kind of organizations that the government, the FCA would like to see available to help people. It's more important than ever, you know, once again to see Amigo there, available to the people that need it.
Look, we 100% agree with that. The government has not shown much enthusiasm for putting its hand in the pocket to help that money be lent out. They go, "Oh, yes, we agree with you," but then, you know, nothing happens.
Yes. Are conversations ongoing with government at any level as far as that is concerned?
Not actively. We have Nick does most of our kind of governmental relations. They are in the trenches with no money to spend on gas and electricity for the population. That's where they're putting their pennies at the moment. In a way rightly so, because people, you know, will die if they can't heat their homes. The problem with government is it moves incredibly slowly, and you have a few gainsayers on the Labour benches just to celebrate the rest of it. Are they, on a 5-year view, they may get it, but they're not currently getting it, and they're not currently doing anything about it.
Okay. Well, I wish you the very best of luck in the continuing discussions that you're having, undoubtedly having with people that are viewing Amigo through the same eyes as myself, as many other shareholders who are prepared to wait and support the company on an ongoing basis in the belief that it has a very good future.
Thank you for that.
Thank you. Appreciate that.
We share that belief. Any more questions from the Zoom sphere?
Yes, there's one hand that was not provided.
Okay.
Don't think we've met.
Okay. Ned?
Yeah. hey, guys. what's the timing of the bond repay?
This month.
Thank you.
Any more questions?
We have one. Philip.
Hello, Philip.
Hello. Yes, just to echo the previous comment, I think there's a massive demand for Amigo business going forward, and it could be very, very profitable. I'm surprised that you haven't been able to find the investment you need. I'm just wondering, what are the reasons for that and what can be done to change it so we can find that investment?
At a very, very high level, we have run into incredibly difficult economic conditions out there, which we've just touched on. For our customers and our potential customers are much more exposed to the vagaries of inflation and energy, et cetera. There's a concern about the current near-term customer base and our ability to access it, and we are indeed finding that. We've got lots of people who want the loans, but we cannot get the affordability equation to work for them. That will change.
Mm.
There is even in spite of the fact that the FTSE is at an all-time high. That's mostly kind of, oil and gas and minerals and a few banks driving that.
Mm.
If you look at the UK mid-cost, higher cost lending sector, it's flat on its back. If you are investing in the sector, you would think, blimey, that's not been good. Then there is a concern that we have a regulatory environment which is changing with the Consumer Duty of care in a way that we can't 100% predict. You've got those three elements nagging at investors. They will all say, "Well, I'll see how it looks in a year's time," or something like that. That doesn't blooming well help us because-
Mm
... in 3 months time or 2 months time. That's the territory we're looking at. You know, we have, as Danny said, looked at. There have been 4 sets of advisors out there fishing in different ponds. You can't. You know, the traditional long only investor, the likes of Schroders and Aberdeen Asset Management have drawn their horns in and away from the what you'd normally see for a normal company, we're not normal to underwrite a rights issue. You then go to the private equity houses who we either are put off by the current economic environment or we're too big, wrong jurisdiction, or we don't do financial services. The whole slew.
Whilst the pool is in principle immense, we're dealing in a relatively minor puddle of it. You then got the harder to reach family offices which have been explored. In a way, you can never end with that. You can always say, "What about this one or what about that one?" A good trawl has been done with one of our advisors in that particular bit of space. If I was to say to you, "There's nobody on the planet who will invest," that will be inaccurate. It's been well advertised as an opportunity for the PE houses who will spot it. A respectively good trawl of the difficult to reach family offices has been done as well. I've rambled with that.
I don't know whether that answers your question.
No, no, that's fair enough. Yeah, just think, again, just thinking from earlier comments. If, if I know appreciate the conversations are ongoing, but if it looks like you aren't gonna get the money, it sounds like you've probably only got maybe a few weeks left at the most before you then have to say, "Right, we can't do it." Then do you go back to the FCA and try and change the deal somehow, or I don't know. You know, You know, is that gonna be the next step? If so, you've then got what? Another week or two to get something amended if, you know, if at all, and then, and then the company will wind down proportionally.
Yeah.
Is that what we're looking at?
Let me answer the question slightly differently. We are leaving no stone unturned in terms of trying to find a solution. Time is not on our side. If we have to amend the scheme, that takes, you know, weeks, not days.
Mm.
It's not in the gift of the FCA. The FCA's gift is to say, "Oh, we don't like it," and oppose. The FCA, which will be fatal. We have to go to the court and the judge to do that.
Yeah.
That's quite a long-winded process. When we're very close to not that being at timed out, but we're not quite there yet. Time is of the essence, all I can say and, but no stone unturned.
Okay. Thanks.
Any more questions?
Yes, we have 1 question. It just says iPhone.
Okay.
Yeah.
Hello?
Hi. Can you hear me?
Yes. Who are you?
My name is Suresh. I'm just a little bit, like, not enough a shareholder. Just want to ask you, like, for the you're looking as an investor, what %, like, you know, the big company like a J.P. Morgan or something, they're trying to work with you?
No. We've got Peel Hunt, who are more of a traditional brokerage house doing IPOs on the main markets, but they also have a specialty of raising money from private equity. We got Ashcombe, who are also private equity-focused, but more with a bent at debt. We have had PwC looking at private wealth providers from around the globe, I would add. We've had another FS-
Specialist investor.
... specialist investment advisor who has a particular angle on a few investors.
Okay. Thank you.
Not J.P. Morgan on this case.
Okay. Thanks.
Any more questions? Do you want to wait a couple of minutes? Any anybody in the room would like to have any more questions posed and possibly answered if you're lucky? Nope. Another 30 seconds for people to put their hands up.
Again from, it's iPhone.
iPhone.
iPhone.
iPhone. Right. Welcome back, iPhone.
Suresh.
Suresh.
Well, let's just put his hand down.
Hello. He might not have put his hand down.
No, sir.
Right. I'll give you 30 seconds, and we can sing the national anthem or whatever you fancy.
He can.
Oh, sorry. Hello. Yeah.
Hello. Hi, can you hear me?
Yeah.
Excellent. Thank you. I was unmuted by you guys there. Apologies, I'm a late entrant to this discussion. If this question's already been asked, obviously, just give me short shrift. I'd like something clear about the ownership of shares. If you go into-
Mm-hmm
...a wind down situation, can you categorically answer, please, whether our shares retain value with RewardRate or however the situation unfolds after the wind down or are we totally dead in the water?
It's the latter, I'm afraid.
Right. Okay. Thank you.
Any more questions? Okey doke. Look, thank you very much indeed, for your time today, and thank you for the engagement, the care and the interest. We're very grateful to everybody. We are trying everything we can think of, no stone unturned to solve this problem. I know it's testing your collective patiences. Unless anybody has anything else to say, I should now like to formally close the meeting. Thank you.