King & Wood Mallesons‘ European arm has failed to complete its planned recapitalisation programme, which was paused last month after a number of partner departures.
In a statement the firm said: ‘Having completed its assessment, a revised plan was submitted to the EUME partnership under which the same level of new partner capital was required, but with the financial support of the verein member firms. Regrettably, insufficient value of new capital was committed.’
‘The firm will continue to service the needs of clients, operating on a business as usual approach. The EUME partnership board and management are considering a range of strategic options, including mergers, in conjunction with the firm’s bankers and financial advisers. A further statement will be made in due course.’
KWM’s legacy European practice has had a turbulent time over the past two years following a series of exits. It is carrying more than £30m in debt.
The recap programme was paused after four heavyweight partners, including funds head and major biller Michael Halford, private equity partner Jonathan Pittal, corporate partner Andrew Wingfield (who is already at Proskauer Rose) and former managing partner Rob Day quit the firm.
The rescue deal required around 60% of the European partnership to commit to a 12 month lock-in and a contribution of around £14m in capital. This meant around 70 of 120 partners had to agree. Salaried partners were also asked to contribute £60,000.
This would have guaranteed the remaining partners at least £11,000 per equity point, against a current figure of £14,000. The new value would see partners on the lockstep earn between £220,000 and £660,000, depending on their position.
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