Amigo Holdings PLC (lon:amgo)
Amigo – The Board 2 – 1 Richmond Group (Their Strategy Becomes Clear)

Amigo Holdings PLC Share Price
Grade:The Pink Grade - A Pure Slightly Informed Gamble, The Market Doesn't Like The Company But I Think That I Understand Why.
Title: Amigo – The Board 2 – 1 Richmond Group (Their Strategy Becomes Clear)
Company: AMGO - Amigo Holdings PLC
Share Price Then: 12p
Author: Ian Smith
Date: Fri 28 Aug 2020
Comments: I have been really struggling to understand the RG position but JB’s recent tweet makes sense of it.

I will soon pass another irrevocable order to our brokers. This time, a buy order, for 29% of Amigo, to be purchased at any price up to 20p per share, in the days immediately following my appointment

So the sell off frees him from the Share Holder agreement that prevented him from exerting control.

For convenience let’s say he sold his shares at 8p per share on average, he buys almost half of them back (29% of Amigo) at 20p giving him almost effective control of the company.

If you believe that the company has any value then 20/8= 2.5, times 20p = 50p share would see RG even financially on the recent transactions but with a share holding half of what it was, if the share price were to rise to 70p then RG would be almost financially even at a 60p per share valuation.

As an example Imagine that you had 100 shares at 50p each or £50 worth, which was the share price pre the covid dip that affected many companies. A genuine free market value of the shares is hard to determine, not least because of the RH sell off.

Num Bank
Position Shares Balance

Starting 100 £0.00
Sell at 8p 0 £8.00
Buy Back 20p 100 -£12.00
Sell at 50p 0 £38.00
Or
Sell at 70p 0 £58.00
Or
Sell at 100p 0 £88.00
Or
Sell at 120p 0 £108.00

So yes there is a definite loss in this approach in comparison with doing nothing, but it is not a ridiculous loss if the prize is regaining control of your company.

It seems reasonable to assume that the 29% purchase limit is there to avoid hitting the point where he would have to offer to purchase the whole company.

So this does beg the question were any of the shares sold, sold with any form of gentlemen’s agreement that they can be bought back at the price they were sold at plus a reasonable profit?

Don’t like what I’m offering? Vote for me and sell the shares you bought from me, back to me (at a good profit).

Which is probably an attractive offer to people buying the big sell off speculatively although long term holders would want to stay invested as it is a terrible price for them.

If this was the plan since being rejected for a board position a few months back then it does seem to be one that has a good chance of success, the plan gets carried not because the share holders believe in it, but because it is a good deal for the new share holders.

Clearly only half of the new shareholders will be able to sell directly, but the open market price would probably exceed 20p at least during the time it takes to work out if JB can lead a recovery.

So this just leaves the language of the recent tweets, does it actually mean anything or was it just part of the plan, as one of the risks of the sell off is that the shares would be bought by the Amigo Board or Board friendly people.

Is there any chance of the company recovering? Closing Amigo as it currently stands as it has been regulated out of business is a sort of admission that they were doing something wrong but maybe that doesn’t matter, taking the funds and using them to lend on the purchase of products directly seems to be the preferred future.

I was looking at Studio recently, they seem to be using the mail order catalogue model of selling product at close to full price along with almost guaranteed credit, eBay have a credit facility so there would be a market for such a service.

It will be interesting to see if the Amigo board makes a complaint about market manipulation, because if the above is correct then RG sold its shares with the intention of buying them back and the main reason for doing so was to alter the way that the company is governed. That RG lost money in the short term may just be a cost especially as in the long term that is loss could easily be recovered.

The Q1 2020 results don’t contain anything of real significance to anyone who has been following the company, and so far the response to the GM request is The Company is consulting with its regulators and its advisors so I expect the maximum allowed delays before the meeting occurs rather than let's get it done.
Read Count/ID: 414/13177

Buy/No Buy In A Nutshell
NegativesA combination of making risky loans and an unwillingness to tell complainants and regulators that the borrower and guarantor has the majority of the responsibility as they asked for and accepted the loan
PositivesNew management could get much more aggressive with people complaining that they asked for and were given loans but they can't afford them.
Initial Review Price7p
Last Review Price17.8p
Last Review Date21-Aug-2020
Navigation & Details
Pages


Share Commentaries, their purpose.