Life after death for Slater & Gordon? It seems so.
But not for existing shareholders who have been all but wiped out by a recapitalisation deal agreed to at the legal services company’s annual meeting yesterday.
As a result the shares rallied 15% to 4.4 cents a share after shareholders voted in favour of the plan.
Almost 70% of votes at the firm’s annual general meeting in Melbourne on Wednesday backed the plan which will see hedge funds led by New York-based Anchorage Capital assume control in a debt-for-equity deal.
Chairman John Skippen said recapitalisation was “essential for Slater and Gordon to avoid insolvency" and the only way to secure a future for the firm and its stakeholders.
Shareholders agreed to a 1 for 100 share consolidation as part of he deal which is aimed at writing off the firm’s debt pile.
The company’s market value plunged and its debt has soared in the wake of its disastrous expansion into the UK, via the $1.2 billion acquisition of the professional services division of the firm Quindell in 2015.
Slater and Gordon’s market value fell from $2.8 billion in April 2015 to just $15 million yesterday. Mr Skippen said he will stay on as chairman until the deal was finalised, most likely late this month, after which the new owners will appoint a new board of directors.
