Not sure if anyone has posted this from today's SMH.
Embattled listed law firm Slater & Gordon has filed its UK accounts which, unlike its Australian filings, include a note the company is rated as a going concern only until the end of March 2017.
April 30 this year looms as the deadline Slater & Gordon has to convince its bankers to hold off on calling in its debts in March next year. Slater & Gordon owed its banking syndicate, which includes Westpac and National Australia Bank, $783 million as at December 31.
The law firm is in a fight for survival following a horror 2015 that saw its market capitalisation plummet following an accounting scandal in its UK arm and weaker than expected growth in both its British business and its Australian arm.
The urgency for a debt restructure was increased after the company booked an $876.4 million write-down in February, which saw its debt-to-equity ratio blow out and is believed to have led to the company breaching its covenants.
Slater & Gordon's lenders may force the law firm to launch a massive capital raising. Photo: Jessica Shapiro
If a deal is not reached by the end of the month Slater & Gordon's lenders have the right to ask the company to repay its debts in March 2017 – a move that could spark a massive capital raising by the company.
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According to Slater & Gordon's UK accounts signed on March 31 and filed on April 8: "The directors, having given consideration to the current financial forecasts for the group and the company, the engagement with the banking syndicate and its financial advisers, the comprehensive review and the performance improvement programs being implemented by management, consider the going-concern basis of preparations is appropriate for a period to 31 March 2017."
The text in that paragraph of Slater & Gordon's UK accounts is remarkably similar to a statement by the company in its Australian accounts, however, there is no mention of the company being considered as a going concern only up until March 2017.
A going concern is a company that has the resources to operate indefinitely and meet its obligations.
The Australian half-year accounts, released in February, read: "The directors, having given consideration to the current financial forecasts for the group and the company, the engagement with the banking syndicate and its financial advisers, the comprehensive review and the performance improvement programs being implemented by management, consider the going concern basis of preparations is appropriate."
Slater & Gordon has declined to comment on its accounts or the progress of discussions with its lenders.
The law firm has spent the past few months providing its lenders with weekly updates on its cash-flow position as part of its negotiations with its lending syndicate.
Its consolidated business listed in Australia reported negative cash flow from its operating activities of $83.3 million for the six months to December 31. Slater & Gordon posted a massive $958 million loss for the half.
Read more: http://www.smh.com.au/business/bank...t-deadline-20160419-go9pkq.html#ixzz46GGWC36W
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