All-time low for Slater & Gordon

Shares in embattled law firm Slater & Gordon slipped to an all-time low after the firm told investors that recovery in its UK business is taking longer than expected.

In a trading update to the Australian stock market ahead of its half-year results, the firm said its talks with lenders to recapitalise the group are expected to be concluded ‘in coming months’.

It admitted that the continued support of lenders is fundamental as current debt levels exceed the company’s total enterprise value.

Analysts say the two most likely options for Slater & Gordon are a debt-for-equity swap or the issue of convertible notes to become shares for the creditors at a future date.

In the UK, the company said it expects half-year EBITDAW (profits before interest, depreciation, amortisation and movement in work in progress) and cash from operations to be an improvement on the prior period.

It added that turnover “reflects slower than anticipated progress with various productivity improvement initiatives and (in some practice groups) slower than expected case settlement profiles” and is forecasting stronger billings in the second half as its turnaround plan, including staff cuts and office closures, continues.

Slater & Gordon also warned its UK business was carrying A$327m (£201m) of goodwill at 30 June 2016 and this could be impaired, pr obably as a result of upcoming governmental changes that will affect the personal injury market.

In Australia, the said it firm has been impacted by negative sentiment about the business , which means fees and services revenue in the first half is expected to be lower than the prior period, with declines across both personal injury law and general law.

Its share price fell to a new low of AUS$0.17 (10p), compared with an all-time high of more than AUS$8 in April 2015.

Slater & Gordon’s share price has collapsed over the last year, following its disastrous £673m acquisition of the professional services arm of Watchstone Group, previously called Quindell, in the UK.

The firm employs more than 3,500 people across offices in the UK, including Manchester, Liverpool, Preston, and Chester.

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