Slater & Gordon has successfully agreed a deal to maintain its lending facility two months after the firm was told it may have to repay its A$789.3m borrowing early.
The Australian listed firm agreed to present an operating plan and restructuring proposal to its banking syndicate after posting a loss of A$958.3m (£493m) at the half-year. If Slater & Gordon’s proposals failed to meet its lenders’ expectations the firm faced being forced to repay its debt as early as March 2017.
Under the new agreement Slater and Gordon will keep its maturity profile and lending facility limits, which according to its last full year accounts can extend to A$850.3m.
Managing director Andrew Grech said in a statement: “We remain focused as a management team, on executing our performance improvement programme across the business to improve profitability and cash flow, and reduce debt.
“We’re confident that the amendments we’ve entered into today with our lending group provide us with the flexibility and time to execute and continue our performance improvement programme.”
Slater & Gordon’s half-year loss was attributed to the firm’s £700m acquisition of insurance outsourcer Quindell’s professional services arm. Following the deal the FCA launched an investigation into an overstatement of Quindell’s 2014 profits. This was later ended in order to allow the Serious Fraud Office to begin its own criminal investigation.
In March Slater & Gordon general counsel Moana Weir resigned after spending less than two months at the firm. Weir had joined the firm at the start of the year after her predecessor Kirsten Morrison was moved to the UK to support UK and Europe managing director Ken Fowlie.
Due to a number of regulatory changes effecting the market many law firms have seen profitability fall drastically. Following November’s Autumn Statement, which announced plans to remove the right for general damages for minor injuries in road accidents, Slater & Gordon’s shares fell 52 per cent from A$1.38 to A$0.65.
Last year insurance giant Parabis collapsed due to number of factors including the prohibition of referral fees, its high level of debt, and poor integration.
Following Slater & Gordon’s announcement yesterday its share price rose from A$0.295 to A$0.59. Its share price has now dipped slightly and stands at A$0.485 (as of 3 May).