Friday 25 June 2021 10:30 am

Amigo shares jump after lender extends funding lifeline

Amigo today said it had secured three months of breathing space from its lender as the business tries to avoid collapse.

The guarantor lender said the bank had extended the grace period, which was set to run out today, to 24 September. However, it has been cut to £100m from £250m.

Amigo has been under pressure after a flurry of customer mis-selling complaints threatened its collapse.

Following the announcement, shares in Amigo shot up 6.2 per cent as markets opened.

London’s High Court rejected Amigo’s proposed rescue plan in May that would have cut payouts to customers, after it was opposed by the Financial Conduct Authority.

At the time of the ruling, High Court justice Robert Miles rejected the company’s claim that it would go into insolvency if the scheme was not approved.

During the grace period, the bank will not take action if Amigo breaks the conditions attached to the securitisation facility.

The waiver on Amigo’s facility has been extended several times, after an initial extension from July to December was designed to to give it time to navigate the impact of Covid.

It was later extended to today, before the company decided it needed yet another extension.

Amigo reiterated that it was reviewing its options, which could include a new rescue plan or insolvency.