LOAN company Amigo has revealed more details of a bid to save the business and its 200 Bournemouth jobs – and warned the alternative is collapse.

The guarantor lender is hoping to win approval from creditors and the High Court for a scheme to limit compensation to borrowers with mis-selling complaints.

Amigo’s share price – which topped £2.97 at its high in 2019 – fell a further 40 per cent to 3.56 pence on Monday morning after the business proposed raising more capital by issuing 19 new shares for each existing one.

Its new business scheme would see £97million allocated from Amigo’s resources to compensate borrowers – with the possibility of an extra payment if the existing loan book generates a better return than currently expected.

It intends to generate £15m for the compensation scheme and future lending by raising new capital within a year of its new business scheme being approved.

A rights issue would give existing shareholders the chance to buy the new shares. Existing shareholders would own no more than five per cent of the business unless they bought more.

The company said: “If shareholders do not approve the rights issue, the new business scheme will revert into a wind down under which the shareholders will receive nothing in respect of Amigo Loans Ltd.”

Chief executive Gary Jennison, who leads a new management team brought in after the firm ran into trouble, said: “The board is fully committed to providing the maximum amount of redress possible for qualifying creditors.

“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. They are necessary for Amigo to survive and avoid insolvency.”

Amigo was built on lending money at 49.9 per cent annual percentage rate to people with a poor credit history who could find a friend or relative to act as guarantor.

It ran into conflict with regulators and has not been offering new loans since 2020.

Amigo’s first attempt to save the business by limiting compensation payouts was rejected by the High Court last year. The court agreed with the Financial Conduct Authority that its proposals would unfairly protect shareholders at the expense of borrowers.

If the company can be saved, Amigo says it would pursue a new business model, with payment holidays and reduced rates for good payers.