Amigo Loans founder threatens to block takeover offer

Amigo Loans’ majority owner has threatened to block a takeover offer for the embattled UK lender and has resumed his attacks on the board, which he has been trying to remove for months in a bitter public dispute.

James Benamor, who owns a 61 per cent stake, said he would not consent to the potential sale of the company after Amigo said in a statement on Wednesday morning it had received a £100m offer from an unidentified suitor.

“I cannot agree to saddle Amigo customers and shareholders with this board for an unspecified amount of time, on the hope that they may be able to sell their shares for an unspecified amount,” he said on Twitter. “I will not be entering into an irrevocable agreement with this bidder.”

“The ‘offer’ requires me to call off the meeting to remove the board, which leaves Amigo and its customers in the hands of a board which is simultaneously corrupt and incompetent,” he added.

Amigo provides guarantor loans, lending to people with weak credit scores if they have a friend or family member who will bear the risk of default. Mr Benamor founded the company in 2005, but stepped back after its public listing in 2018.

I am sorry to the customers who have been treated unfairly under their governance, and to the shareholders who have lost so much money

However, he returned and retook two board seats last November and has since been engaged in a vicious war of words with its new management. He accuses them of knowingly carrying out irresponsible lending and failing to do enough to respond to a rise in customer complaints, allegations the company denies.

In the earlier stock market statement, the lender’s non-executives said that “despite attempts to discuss the potential offer with [Mr Benamor’s vehicle] Richmond Group, Amigo has been unable to engage constructively and ascertain Richmond Group's willingness or not to accept”.

A spokeswoman declined to comment on Mr Benamor’s subsequent posts on Twitter.

Amigo’s share price fell another 5.4 per cent to 21.2p after Wednesday’s spat, extending its decline to 91 per cent this year. Amigo said the offer was for 20.9p a share.

Since quitting the board again this March, Mr Benamor has published several blog posts traducing the lender and its management. In one, he said the company was “committing slow-motion suicide”. It was followed by another in late April in which he said he had a “moral obligation” to act after watching the board preside over a “dumpster fire”.

Amigo says it has carried out a review that concluded there were no “systemic” problems in its approach to lending. It also maintains that Mr Benamor initially supported the sale process, whereas he claims to have voted against the decision in January.

Mr Benamor is trying to hold a general meeting to remove the board and has said he would nominate Sam Wells, a former Amigo executive, to take over as CEO. He also proposes that Nick Makin, a solicitor, should become its independent chairman.

“I am sorry to the customers who have been treated unfairly under their governance, and to the shareholders who have lost so much money,” Mr Benamor concluded his latest Twitter thread.

Amigo has been struggling to overcome heightened regulatory scrutiny, as the controversial sector’s rapid growth caught the attention of the UK’s Financial Conduct Authority. 

Wednesday’s statement also revealed that Amigo has entered into an agreement with the FCA to work through a backlog of complaints by the end of June and has “significantly increased staffing” in that department.

Amigo’s difficulties have been exacerbated by the coronavirus crisis. The company halted almost all new lending in March as the lockdown made it difficult to carry out affordability tests and fund new lending.

The company said on Wednesday it had £115m of cash and reached an agreement with its lenders to temporarily suspend performance triggers on its securitisation facility. It has also cancelled its little-utilised revolving credit facility to save money.