Slater and Gordon to receive nil in UK settlement
Written on the 22 October 2019 by Business News Australia
Slater and Gordon (ASX: SGH) will not see a cent from the settlement between Slater and Gordon UK and Watchstone Group.
Slater and Gordon UK, now completely detached from the Australian law firm, has entered into a settlement agreement with Watchstone group following a counterclaim made by the professional services firm.
Initially, Slater and Gordon Australia expected to receive $40 million of any settlement between the UK company and Watchstone.
However, the Australian company will not receive any payment from the settlement which it says will have no adverse accounting consequences for the Australian law firm as the company never recognised the Watchstone entitlement as an asset on its balance sheet.
Under the settlement agreement, Slater and Gordon UK will receive £11 million of the £50 million held in escrow, while the £39 million balance will be released to Watchstone.
No application for costs will be made by either party.
The settlement stems from a counterclaim made by Watchstone Group in August 2019.
The professional services business Watchstone, formerly known as Quindell, was acquired for $1.3 billion by Slater & Gordon in 2015.
It was the beginning of a painful period for the law firm which separated its UK business from its Australian business in 2017 after posting two major full year losses in a row.
The takeover did not go to plan, and in 2017 Slater & Gordon UK brought a claim for £637 million against Watchstone after they were hit with an $880 million impairment charge, which S&G attributed to the Quindell acquisition.
Watchstone non-executive chairman Richard Rose says he is pleased the company could come to an agreement with Slater and Gordon UK.
"We are pleased with the resolution of this matter," says Rose.
"Whilst Watchstone remains firmly of the view that the legal action commenced by the other side was without merit, the board believes that a settlement at this level is in shareholders' best interests as it brings certainty."
Shares in Slater and Gordon are up four per cent to $1.04 per share at 11.32am AEST.
Business News Australia
Author: Business News Australia