Amigo Memo 080421
- Understand the % of vote value we expect to vote for Amigo’s proposed Scheme: (1) Scheme vote value estimates for each sub-group within Scheme Creditors (a. “current” redress customers with loans still outstanding; b. “past” redress customers who have repaid their loans; c. FOS); (2) reasons why each sub-group should vote for or against the Scheme and our estimated % of each sub-group voting for the Scheme
- Understand what powers the FCA has to follow through on its FCA Investigation (into Amigo’s creditworthiness assessment process) and associated potential remediation costs, irrespective of whether Amigo’s Scheme is sanctioned or it files for insolvency, and how such future remediation costs could, through the FCA’s range of powers, circumvent the Scheme’s Release Agreement and lead to such future remediation costs being paid ahead of Amigo’s SSNs (in contrast to their de facto lower ranking vs SSNs in insolvency)
- Understand our cash flow projections, SSNs recovery estimates and equity valuations across our scenarios (1. Scheme sanctioned – potential FCA Investigation remediation costs not binding; 2. Scheme sanctioned – potential FCA Investigation remediation costs binding; 3. Insolvency; 4. Status Quo; 5. Bull Case), together with our estimated probabilities of each scenario
- Detailed Scheme voting analysis
- Analysis of FCA powers in respect of consumer protection in situations where FCA-authorised firms seek to use schemes of arrangement to limit their customer redress costs
- Cash flow projections, SSNs recovery estimates and equity valuations across our scenarios
- Comparison of Amigo’s (temporary) run-off to date vs our previous estimates
- Detailed asset quality and provisioning analysis
- Case studies of previous (and current) other attempted and implemented schemes of arrangement by FCA-authorised firms
- How much vote value is each sub-group within Scheme Creditors (a. “current” redress customers with loans still outstanding; b. “past” redress customers who have repaid their loans; c. FOS) likely to have? How would we expect each sub-group to vote?
- How are claims management companies advising Amigo’s redress customers to vote in respect of the Scheme and why might “current” redress customers with loans still outstanding in particular, but also potentially “past” redress customers who have repaid their loans, be significantly better off should Amigo file for insolvency or maintain its status quo run-off than in the Scheme scenario (contrary to Amigo’s estimates of redress claims recovery in insolvency)?
- To what extent would the Scheme truly limit Amigo’s redress liabilities?
- Is Amigo’s own estimate of recovery on its secured debt (SSNs and securitisation combined) at 80-85% realistic?
- How sensitive are our cash flow projections, SSNs recovery estimates and equity valuation to changes in redress costs, to potential FCA Investigation remediation costs and to remaining lifetime loss rates on customer loans?
- If the Scheme is sanctioned, can the FCA Investigation still result in further remediation costs that Amigo may have to pay prior to SSNs?
- Can the FCA impede Amigo’s ability to collect in its existing customer loans? What powers does FCA have over FCA-authorised firms in insolvency?
- View, Variant Perception & Recommendations
- Amigo’s Proposed Scheme. Predicted Scheme Voting & FCA Risks To Effective Scheme Implementation Even If Sanctioned
- Run-Off Cash Flows Under Status Quo, Scheme Sanctioned, Insolvency & Bull Scenarios. ALGL Rest Of Group (Ex. Securitisation) & AMGO Funding (No. 1) Ltd (Securitisation)
- Asset Quality & Provisioning Analysis
- Potential Remediation Costs From FCA Investigation
Appendix 1 – Steady State FCF, Historic Financials & Financials As A “Bank”
Appendix 2 – Group Structure, Indenture & Securitization Facility