Shares in Slater & Gordon are getting smashed after the embattled law firm said it was in talks with lenders to recapitalise, and acknowledged the debt it currently carries exceeds the value of the business.
A short while ago, the shares were down 22% to just 21 cents, giving it a market value of just $95 million.
In March 2015, the shares were above $8 each and the company was valued at $2.8 billion. Since then the shares have been punished regularly and today’s fall is far from the most dramatic. On November 26, 2015, the shares fell 51%, then plummeted a further 26.6% the following day.
Australia’s oldest law firms, and the first in the world to list on a stock market, paid $1.3 billion in March 2015, for UK firm Quindell, but later that year, the British government moved to cap personal injury compensation.
Last year Slater & Gordon posted an annual loss of $AU1.017 billion thanks to a $879.5 million non-cash impairment against the value of goodwill in the UK business. In June 2016, $327.2m of goodwill remained on the balance sheet, but the company says it will be making another writedown.
And having built its reputation as one of the nation’s leading class action litigators, Slater and Gordon now faces the bitter irony of a $250 million class action, the largest by shareholders in Australian legal history.
The company told the ASX today that its half yearly financials were not yet ready for presentation, but acknowledged its Australian arm was starting to be impacted by negative sentiment surrounding the group.