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Lender Amigo plans new $128 million rescue proposal, shares fall

By Reuters

-British sub-prime lender Amigo said on Monday it plans to contribute 97 million pounds ($128.32 million) under a new business rescue proposal, revised up from 35 million pounds that it had previously estimated.

The lender laid out two different options — one dependent on the restart of lending operations as well as securing money through an equity raise, and the second being through a managed wind-down of its guarantor loans business.

Amigo, which used to lend to people who fail to secure a loan from a mainstream banks before it halted new loans, said it will put both the schemes to a vote to its creditors.

Shares of the company dropped 13% in early trading.

The new proposals come after London’s High Court in May rejected Amigo’s previous plan that would have cut compensation payouts to customers who had complained about the company mis-selling loans to them.

The company expects to fund the new business rescue proposal from the equity raise and new capital commitments.

Amigo also said that the country’s financial regulator had informed the lender that it might impose a requirement on its regulatory permissions, which could restrict the company from continuing its business.

The Financial Conduct Authority’s investigation into Amigo is still ongoing.

($1 = 0.7559 pounds)