Why Read?

• Understand how we estimate Amigo’s total customer redress / conduct costs across Amigo’s FOS customer complaints / FCA VReq, Amigo-specific FCA Investigation and FCA multi-firm review of the guarantor loan sector at c. £206m
• Understand how we estimate Amigo’s loan losses on Q3 20 Stage 1 gross customer loans at 33%
• Understand how Amigo’s Securitization Facility works and the strong loan putback and acceleration rights this benefits from, making the £ 7.625 1/2024 Senior Secured Notes (SSNs) heavily subordinated here (unless Amigo files imminently for administration)
• Understand how, from our estimated run-off cash flows, we arrive at a base case recovery on Amigo’s SSNs of 37 cents with a liability management exercise potentially improving this to 44 cents
• Understand plays that SSNs holders may be able to pursue to seniorise their position vs customer redress claims and potentially against the putback rights of the Securitisation Facility
• Understand why there may be value in Amigo’s SSNs should they drop below 30 cents
• Understand why none of Non-Standard Finance, Provident Financial or New Day is likely to acquire Amigo in the near term 
• Understand Richmond Group / Mr Bennamor’s likely current thinking on Amigo / the UK guarantor loans market and what possible plays he may make after selling down his stake in Amigo to zero
• Understand why we believe it will ultimately be Amigo’s top-up / repeat lending that brings about its demise, both in terms of potential FCA actions beyond the current FOS backlog / FCA Vreq and in terms of latent asset quality problems
• Understand why Amigo’s historic financials, whether seen as a corporate or bank, including “steady state” FCF assuming a constant loan book, were flawed as an indicator of the strength of the business 
• Comparison of Amigo vs Non-Standard Finance (UK’s # 1 and #2 guarantor lenders respectively)

What’s New?

• Estimated total customer redress / conduct costs
• Estimated lifetime loan losses on Amigo’s loan book as part of run-off cash flow modelling
• Securitisation Facility analysis
• Loan loss analysis for Amigo during after the global financial crisis 

Questions Answered

• What does Amigo’s COVID-19 forbearance and funding position disclosure post Q3 20 imply for its current level of arrears loans?
• How instrumental has repeat lending been in masking unaffordable loans (from the borrower / guarantor perspective) and in inflating Amigo’s historic profitability and (steady state) FCF?
• What can we learn from the Brighthouse and Wonga cases in terms of customer redress cost potential at Amigo?
• What should SSNs holders do to try and protect their position vs customer redress claims and putback rights of the Securitisation Facility?
• How severe could loan losses end up for Amigo, given its COVID-19 forbearance programme (and FCA forbearance requirements now extending to Oct-20), weak macro, lack of repeat lending currently that might otherwise mask asset quality problems, deliberate non-payment by borrowers and guarantors and lower liquidity in UK the guarantor loans market (which would otherwise enable some borrower refinancing) with Non-Standard Finance currently in breach of its own Securitisation Facility covenants?