BANKS TO PROBE SLATER AND GORDON'S BOOKS
Written on the 8 January 2016 by Nick Nichols
SLATER and Gordon (ASX:SGH) has confirmed that its bankers have appointed advisors to review the company's accounts.
McGrathNicol has been given the task by National Australia Bank and Westpac to probe the company's financial position in the wake of a profit warning that has pushed the company's shares down to record lows over the past month.
Slater & Gordon's woes stem from its UK business, the Quindell arm acquired in March last year for $1.3 billion. After confirming FY15 profit guidance at its AGM in November, the listed legal group withdrew it altogether last month in the wake of the uncertainty.
"In our FY16 financial update on December 17, we informed the market that Slater and Gordon has more than $100 million headroom within its banking facilities, that this headroom is expected to increase as the financial year progresses, and that we had commenced a review of the company's forecasts by group CFO Bryce Houghton and independent advisors appointed by the board," says Slater and Gordon's managing director Andrew Grech (pictured).
"As part of that review process, we agreed that our banking syndicate would appoint their own advisers who will work alongside those appointed by the board.
"The company has continued to work collaboratively and cooperatively with the banks and our advisors. Slater and Gordon will continue to deliver excellent outcomes for its clients, as it has done for the past 80 years."
The appointment of the advisors by the banks follows news last month that Slater and Gordon could be subject to a class action by shareholders over the loss of share value.
Maurice Blackburn and class action specialist ACA Lawyers have separately called for shareholders to join the potential action.
Maurice Blackburn says the action will centre on what it says has been 'long and serious consideration of the series of events that have plagued SGH this year', particularly from April 1 to December 16.
Slater and Gordon's shares lost 90 per cent of their value in that time as the company's problems in the UK came to light.
The shares hit a high of $8.07 in April after the company launched a $6.37-a-share entitlement offer that raised about $890 million to finance the UK acquisition.
The shares fell to a low of 67.5c in early trading today.
Author: Nick Nichols