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Commentary On Amigo Holdings PLC

Title: Amigo – EGM Notification Was Really Disappointing
Company: AMGO - Amigo Holdings PLC
Share Price Then: 22p
Author: Ian Smith
Date: Thu 21 May 2020
Comments: On April 29 Richmond Group Ltd (RGL), the trading company of the company’s founder and 60% share holder requested an EGM to proposer the removal of the board and its replacement with directors selected by RGL.

The primary reason for this seems to be explained in a blog on the 4th of March.…..Within one year of my stepping down from the board, the most efficient company in the FTSE 250 had become a cash cow for consultants, lawyers and suits, all of whom had an interest in keeping the gravy train running for as long as possible, but no interest in the company being honest with shareholders or customers about the situation it was in…...

On the 20th of May Amigo published details of EGM to be held on the 17th June, it may be worth noting that the 20th of May was legally the last day that such an announcement must by.

This mean that around 7 weeks will have passed between receiving the EGM request and it taking place.

If you believe James Benamor and his…keeping the gravy train running… argument then this may be significant.

The EGM notice was quite clear in stating that the board recommends that share holders vote against its removal and it give its reasons. Yet these reasons were not that the board was doing a great job but were mostly fear and doubt.

Interestingly one of their strongest arguments, that the proposed directors do not have FCA approval for the proposed role has been weakened by the 7 weeks between the request for the EGM and its occurrence. It is quite likely that if approval is going to be granted it will have been granted.

What is critical to me is that RGL have a 60% share holding, so if their nominated directors are appointed what will be the effect on the other 40% of share holders. It may be possible that some deal that benefits RGL at the expense of others could be arranged but is that likely?

Given that the desire to sell the business has been public knowledge for a while it may be that long term share-holders may find themselves forced to sell at a lower price than they paid.

Those whose bought at the float and as late as Aug 2019 will have most bought at between 150p and 300p, and if a sale was agreed by RGL + some other shareholders it will probably be at a lot less than this, given the current price of 22p.

If such a sale were to happen it would hardly be either a surprise or any sign of bad faith.

The other option seems to be to allow the existing board to remain or appoint its own successor’s and pretty much carry on as they are doing now.
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