Andrew Grech, Slater and Gordon (S&G)’s group managing director has stepped down with immediate effect today (29 June) as part of a recapitalisation deal replacing the firm’s entire board, in an attempt to shore up financial resources.
Grech will remain a non-executive director of Australian-headquartered S&G for a short period until a successor is named. S&G Australia chief executive Hayden Stephens and UK chief executive Ken Fowlie will continue in their roles.
The beleaguered firm has entered the recapitalisation agreement with its main lenders, Anchorage Capital, a New York private equity house. Together, the lenders represent over 75% of the company’s debt by value.
S&G said that the recapitalisation ‘is intended to provide the company with a sustainable level of senior secured debt and a stable platform for its future operations in both Australia and the UK,’ in a statement released today to the Australian Stock Exchange.
The plan means that all existing directors of the firm will resign ‘in due course’. Once completed in October, the deal grants S&G’s lenders 95% ownership of the company’s equity. Existing shareholders will be left with less than 5% equity. The lenders have already committed to providing the firm with A$40m working capital facility, with a potential three year A$30m senior debt facility for future financial flexibility.
Grech’s exit announcement follows the service by S&G’s UK subsidiary of a £637m London High Court claim form on Watchstone Group earlier this month. The claim alleges that the UK-headquartered technology company, then known as Quindell, fraudulently misrepresented its finances during S&G’s buyout of Quindell’s professional services arm in 2015.
S&G claimed that Watchstone also breached its warranties relating to the sale. S&G maintain that the purchase would not have occurred had Watchstone properly represented its position.
S&G is in a troubled financial position, posting a 34% drop in total revenues in February this year. The figure fell from A$487.5m to A$322.7m.