Amigo Loans handed lifeline by its lenders until Christmas

Lenders to Amigo Loans have thrown the struggling firm another lifeline by extending a deadline by four more months.

The guarantor lender said it now has until December 18 to ensure that it is within the terms of a multimillion-pound financing facility.

The lifeline extends the deadline, which was meant to run out last Friday.

The facility will give Amigo enough time to understand the impact of the coronavirus pandemic, it said.

The new deal will also reduce the facility’s size from £300 million to £250 million, the company said.

The waiver on the terms was announced in May, and was due to expire at the end of July, but lenders then gave Amigo another few weeks.

Amigo needed the waiver after the Financial Conduct Authority (FCA) stepped in to ask it, and other lenders, to support customers through the Covid-19 pandemic.

Amigo said: “This follows the announcement on 27 July 2020 extending the waiver period to 14 August 2020, and allows both Amigo and its lenders the opportunity to fully understand the impact of Covid-19 on the business, whilst maintaining the existing facility.

“In addition, the size of the facility has been reduced from £300 million to £250 million, reflecting Amigo’s current lower funding requirements while lending is paused.

“All cash generation arising from customer loans held within the facility will continue to be used during the waiver period extension to further reduce the outstanding balance. As of the date of renewal, the facility was drawn at £199 million.”

Last month Amigo said there was “material uncertainty” that the company could continue trading as a going concern.

On Monday, it said: “Amigo has adequate liquidity to continue to fund operations and support its customers, with close to £145 million unrestricted cash held as at July 31.”

The company is currently working through a backlog of thousands of complaints to ensure it is within FCA rules.