Subprime lender Amigo Holdings warned on Wednesday that while conversion rates were improving, challenges remain and its current run rate for monthly originations remained in excess of £1.0m.
Amigo stated that demand for its new RewardRate brand remained strong and lending to date had shown that conversion rates were higher for its non-guarantor product.
“Until Amigo has completed a capital raise, the board is focusing activity on the most efficient use of capital. Given the higher acquisition cost per loan of the guarantor product and the higher conversion rates for the non-guarantor product, the decision has been taken to temporarily pause the guarantor loan offer,” said Amigo, which added that it remains confident in the long-term viability of its guarantor model.
On the capital raise, Amigo stated that while conversations with potential investors to underwrite a £45.0m equity raise were ongoing, it has yet to secure the full amount required and said the situation “remains extremely challenging”.
The London-listed group said if, and as soon as, it expects the capital raise will not be successful, it was legally bound to switch the scheme to its fallback solution – an orderly wind-down of the business.
Amigo also reported that it has now exited its loss-making Irish business, which ceased new lending activities in 2020.
As of 0900 GMT, Amigo shares had risen 5.60% at 2.64p.
Reporting by Iain Gilbert at Sharecast.com
