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On 8 June 2020, Amigo announced that it had officially terminated its Formal Sale Process (FSP). On 27 May 2020, less than 2 weeks prior to this announcement, Amigo had announced a potential acquirer who was prepared to make an offer subject to the firm’s 61% majority shareholder, Richmond Group plc (Richmond), providing an irrevocable undertaking to vote in favour of the transaction. The potential acquirer has now withdrawn from the FSP due to the ‘current market environment’, and Amigo has confirmed it is not currently in receipt of any further offers and is therefore terminating its FSP.
In the events leading up to the cancellation, Amigo announced on 1 June that an FCA investigation had been launched into its creditworthiness checks but confirmed that it was still in ongoing discussions with the potential acquirer. Alongside the announcing the cancellation, Amigo announced that it will be cancelling its dividend in an effort to conserve cash. This decision comes after an increase in customer complaints, which the board believe could cost the firm at least £35 million.
Furthermore, Amigo had been at war with James Benamor, the group’s founder and owner of Richmond. Benamor had put pressure on the board to resign in a series of scathing blog posts, claiming they were ‘unfit’ to manage and insisting he had voted against the FSP, which Amigo denied (see Fall out with founder causes potential disruptions for Amigo sale). On 20 May 2020, Amigo announced that Richmond requisitioned a general meeting to be held on 17 June 2020, in order to remove the board and replace them with directors of its own choosing.
In response, on 1 June 2020 Amigo announced that it had filed an injunction against Richmond, preventing the shareholder from voting in favour of any of its proposed resolutions. The injunction was filed on the basis that Richmond’s attempt to remove all directors and appoint its own nominee directors was in breach of the relationship agreement it entered into with Amigo in 2018. The relationship agreement limits Richmond’s powers as a shareholder, so that Amigo can remain independent, including Richmond not exercising its voting rights to remove the chairman or any independent non-executive director appointed by the board, unless proper protocol, in line with the Listing Rules, has been followed. In its announcement for the injunction, the board also stated that ‘All directors wish to reiterate that they have no desire or intent to remain on the board once replacements have been found in accordance with Amigo's regulatory requirements’. This prompted another cutting blog post on June 3 from Benamor, in which he denounced the injunction stating: ‘This is another disgusting act of self preservation from a board which has hijacked a public company and is running it for their own benefit, at the expense of shareholders and customers’.
Rather than attacking the board’s ‘£115m fighting fund’, which would allow them to ‘hire the best lawyers in the country’ and increase their chance at getting the injunction, Benamor has instead urged fellow shareholders to ‘to vote to remove and replace this board, or to commit fully in the vision of the current team’. However, Benamor has made clear that he would not maintain his interest in the company should the remaining shareholders side with the board, a team he accused of having ‘lost 90% of Amigo’s value in 9 months’ and having ‘paid themselves and their friends outlandish salaries and bonuses’. Resultantly, in the event that the current board is not removed, Richmond has placed all its shares with a broker with irrevocable instruction to sell 1% of Amigo every day after the vote, until its stake is reduced to nothing. Benamor concluded: ‘one way or another, Amigo will definitely go forward with a unified shareholder base and board, either unified around the values and vision of the founding team or around Stephan and Hamish’s vision and values’.
The cancellation of the FSP, alongside settling the dispute regarding the relationship agreement, led to Stephan Wilke (chairman of Amigo), giving notice of his resignation on 7 June 2020, who claimed that these were the two main matters keeping him on the board. Wilke stated: ‘I have chosen to resign now to make it crystal clear to everyone that the assertations made by Richmond Group about the motivations of myself and the board as clinging to our seats for our own ends are completely false’. On 11 June 2020, CEO, Hamish Paton’s departure was also announced, and he is expected to leave the company on 31 July 2020.
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