Slater & Gordon capital structure needs to be reset: insolvency report
Insolvency firm McGrathNicol has released its report on the financial state of troubled law firm Slater Gordon concluding that a restructure may be required subject to additional forward projections.
The report comes as original lenders to the company have offloaded their loans to distressed debt funds and investment banks, amid a growing perception that a "debt-for-equity" swap will be needed to recapitalise the operation
Titled "Group Forecast Review and Recapitalisation Discussion Paper", the report was drafted by the insolvency firm that was appointed by Slater & Gordon's two major lenders National Australia Bank and Westpac in January.
The report says that the fundamental business is in fair shape but the capital structure needs to be reset, according to sources.
In recent weeks lenders have been offloading their debt positions at discounts as low as 38¢ in the dollar.
It then emerged New York-based Anchorage Capital Group was one of the members of that syndicate and now holds a portion of the ambulance-chasing firm's debt stack.
The law firm's two largest lenders are National Australia Bank and Westpac and disclosures suggested that both lenders had made significant provisions against their exposures.
Macquarie was the other major lender in the syndicate, along with Barclays and Royal Bank of Scotland, according to reports at the time of the debt raising. Citi and Macquarie led the $890 million capital raising in April 2015 to finance the Quindell acquisition.
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