(Reuters) -British subprime lender Amigo Holdings said on Monday Chief Financial Officer Mike Corcoran will step down immediately, on a day where its shares fell as much as 62% after the firm flagged potential insolvency.
Amigo earlier in the day said it could enter insolvency if a new business rescue plan and a likely rights issue were not approved by creditors and in court, and shares on the London Stock Exchange closed 42% lower at a record low of 3,480 pence.
Amigo has been scrambling for survival after a deluge of customer complaints early last year of misselling loans. The London High Court in May 2021 had also rejected the company's initial business rescue plan for short-changing compensation claimants.
The new 97 million pound ($131.18 million) rescue plan proposed in December would likely involve a rights issue of at least 19 new shares for every existing share, diluting the stakes of existing investors, Amigo said.
"While it is positive that progress on the Scheme of Arrangement and Amigo's new business plans are progressing, the statement also starkly outlines the extent of prospective dilution for existing shareholders," Ronan Dunphy, banking analyst at Goodbody, said.
"Should creditors vote for the New Business Scheme and the Court subsequently approve it, these provisions provide additional protection for creditors and address certain of the concerns raised by the Court above the previous scheme," Amigo Chief Executive Officer Gary Jennison said in a statement.
"They are necessary for Amigo to survive and avoid insolvency."
($1 = 0.7394 pounds)