Nov 29 (Reuters) - British subprime lender Amigo
said on Monday it expects court proceedings over its new rescue
plan to take at least four months once submitted, and laid out
plans for an equity raise to support the business, dragging its
shares nearly 30% lower.
Amigo had flagged a potential equity raise in August after
London's High Court rejected its older rescue plan that would
have cut compensation payouts to customers who complained about
Amigo mis-selling loans to them.
Subprime lenders like Amigo, which typically lend to
consumers who have been rejected by mainstream banks, have been
hit by a regulatory clampdown in recent years, with the COVID-19
pandemic adding to the strain on operations.
"The likelihood of a potential material dilution for
shareholders is a difficult but necessary consequence of our
situation ... we are an insolvent business so there are no easy
paths if we want to avoid administration," Chief Executive
Officer Gary Jennison said in a statement.
Amigo, which halted all new lending in September, said its
new rescue plan would depend on lending restarting and the
completion of the equity raise. It reiterated that it would have
to file for insolvency if the new scheme is rejected.
The company reported an interim pre-tax profit of 2.1 million
pounds ($2.80 million), and said it was also weighing an early
part repayment or repurchase of some notes.
(Reporting by Sinchita Mitra in Bengaluru; editing by