Shares of Amigo Holdings, the U.K. guarantor-loan provider, took a nosedive after the company issued a warning that it may become insolvent within the next few months. If it fails to sell its assets in a timely manner, the company's London listing will be automatically cancelled.
At 0702 GMT, shares were down 0.05 pence, or 14%, at 0.30 pence.
Amigo Holdings, which is currently in the process of winding down its business, disclosed that its subsidiary, Amigo Loans, plays a crucial role in keeping it solvent. However, once all net assets are returned to creditors, Amigo Loans will be required to liquidate. Consequently, Amigo Holdings will be left with no resources and face insolvency.
The company clarified in a statement released ahead of its annual general meeting that once a liquidator is appointed, its listing will be automatically cancelled to comply with market rules.
While Amigo Holdings remains open to offers for all or any of its assets, it expressed the urgency of finding a viable alternative solution "very soon." If such a solution does not emerge promptly, the company will be forced to convene another general meeting to seek shareholder approval for delisting from the London Stock Exchange and entering into a members voluntary liquidation. Unfortunately, this course of action would leave no value remaining for existing shareholders.