SLATER AND GORDON TARGETS UK COMPANY FOR $86M
Written on the 19 September 2016
SLATER and Gordon (ASX:SGH) plans to sue the UK company behind the acquisition that triggered the law firm's ASX downfall.
The Melbourne-based law firm plans to bring claims against Watchstone Group Plc, formerly known as Quindell Plc, for the $1.3 billion purchase of its professional services division last year.
In a statement to the Australian Securities Exchange, Slater and Gordon said £50 million ($86 million) of the purchase price for the acquisition would be held in escrow against warranty claims that may arise under the Share Purchase Agreement.
If the claims can't be resolved before the escrow release date on November 29, part or the whole of that amount may be retained in the account.
Slater and Gordon posted a $1.017 billion full-year loss, including a $879.5 million goodwill writedown for Quindell's Professional Services Division in the first half.
Restructuring costs hampered the second half, with three of the firm's long-time directors departing in August. Slater and Gordon has also reduced its headcount in the UK by 14 per cent.
Quindell was the subject of a fraud squad investigation last year, which led to the Australian Securities and Investment Commission probing Slater and Gordon's books.
Regulatory changes to personal injury claims in the UK also took a toll on Quindell's profitability.
Shares held steady at 40c a piece following the announcement, down from a high of $8.07 last April after launching an entitlement offer to fund the acquisition.