Shares in Australia-listed Slater and Gordon (S&G) jumped yesterday (2 May) after the beleaguered law firm announced a deal with its lenders following a year battling with significant debts.
The firm released details of the successul debt refinancing on the Australian Stock Exchange on Monday after it was given a two-month window by its banks to deliver a repayment plan by the end of April for its debt of A$741m (£383m).
To extend its principal and interest repayments as it continues to deal with the repercussions of a non-cash impairment charge of A$876.4m (£452.4m) against goodwill that the firm received last year, it has agreed to amendments to the terms of its existing syndicated facility agreement, which includes withholding dividends and increasing the frequency of reporting to its lenders. Under the deal, A$480m (£247.6m) of the debt and interest will be due in 2018 and $360m (£185.7m) in 2019.
The charge was mostly due to a A$814.2m (£420.1m) impairment in goodwill for its Slater Gordon Solutions unit, previously known as Quindell. The firm also pointed to the potential impact of planned government changes that would limit personal injury claims being a significant contributory factor.
The company’s first date for repayment is now listed as May 2018, according to the announcement. In the stock exchange announcement, the firm said the agreed facility was a ‘positive and clear endorsement of the company’s improvement program’.
S&G’s group managing director Andrew Grech said the firm was ‘pleased and grateful for the strong level of support that we have received from our lending group. We remain focused as a management team, on executing our performance improvement program across the business to improve profitability and cash flow, and reduce debt. We are confident that the amendments we have entered into today with our lending group provide us with the flexibility and time to execute and continue our performance improvement program.’
In February, S&G announced its plans to restructure its UK operation as it announced disappointing results, with a £493m global loss for the six months to 31 December 2015.
At the end of March the firm’s general counsel and company secretary Moana Weir resigned after spending just two months at the firm. In February the firm’s UK chief, Neil Kinsella, announced his retirement as UK head of general law, with Siri Siriwardene replacing him.