Lender call for Slater & Gordon
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Slater's management and board embarked on a UK acquisition that destroyed over a billion dollars of shareholder value in less than two years is . Jesse Marlow
The suffering is almost over for Slater & Gordon shareholders as lenders and the company edge closer to an agreement.
Street Talk can reveal debt holders in Australia and the United Kingdom are set to convene on Thursday night via a conference call with their advisors FTI Consulting and McGrathNicol.
An announcement on its fate is expected in the next two weeks. Not surprisingly, 100 per cent
of the equity ownership is expected to be transferred to the lenders, which will be enacted by a scheme of arrangement in which there is a debt for equity swap, as first reported by this column.
It is understood the preference of lenders is for the company to remain listed, and one of the points of discussion is whether the lenders will accept new shares as a replacement for their loans.
Sources said that in the coming months an independent valuation of the company will be conducted on behalf of the lenders.
The main priority of the future owners is to stabilise the business, which they believe is sustainable, so that clients and staff don't head for the exits. The same is not likely to apply to the management and board that embarked on a UK acquisition that destroyed over a billion dollars of shareholder value in less than two years.
Slater & Gordon reported another horror set of financial results this year, posting a $425.1 million interim loss.
The company's share price, which had already fallen 98 per cent from its peak, fell a further 40 per cent this week as the company revealed the extent of its problems and the reality that its fate was at the mercy of the lenders. But the stock bounced 3¢, or 40 per cent, to 10¢, on Thursday on hope among speculative investors that there may be some value salvaged. At that price, the total equity of the accident prone personal injury law firm is a meagre $35 million. That compares to the $760 million owed to its lenders.
