Amigo Holdings (LON: AMGO) shares might have that one last gasp of speculation in them. AMGO is up 200% in London this morning as Michael Fleming makes an intervention into this sorry tale. How long this will last, whether it will make any long term difference, well, that's another matter. We're not sure how we can see that this will change the end note of the tunebut clearly there's some excitement possible.
The announcement itself is: “The Company has been approached by Michael Fleming, a financier and shareholder, to request an exclusivity agreement in relation to the business (the "Agreement") which Amigo has agreed to. This is to allow Mr. Fleming, to explore finding and completing a debt investment in the Company or its subsidiaries. The period of exclusivity expires on 6 September 2023.” While all of this goes on Amigo will continue to wind itself down. The management also seems to think that it's unlikely that there will be any happy or different outcome: “The Board recognises the very low likelihood of a successful conclusion to any discussions arising because of this Agreement but is pursuing the Agreement in line with its duties under the Companies Act to consider the interests of all stakeholders, including creditors, shareholders and employees.”
The real difficulty here is that there doesn't seem to be any way of recapitalising the company that produces any value for the shareholders. For near any money that is put in will go to creditors and, obviously, compensation funds and the lawyers. As Amigo said before: “Amigo isn't even going to try to revive the business. It's winding itself down. And as they say, there isn't going to be anything for the equity. The share price almost certainly should be zero right now.”
Amigo Holdings share price from London Stock Exchange
Now, one thing that this shows is that we were wrong in our dismissal of Amigo's prospects that 6 weeks back. On the other hand this jump does only return the AMGO share price to where it was when we made that dismissal. So we've not been wrong overall.
What happens next we're not sure but our basic thought is that the Amigo business - the low credit rating lending - is dead and gone. Whether something else will be done with it as a shell we're not sure. But why anyone would want to use it as a shell company when it comes with a number of associated problems we're also not sure.
Yes, obviously, it's interesting and something could happen. But quite what we don't understand or grasp.
