Listed Australian firm Slater and Gordon appears to have secured its immediate future with a new finance agreement with lenders.
The company announced the deal today to the Australian stock exchange, stating the agreement should be seen as a ‘positive and clear endorsement’ of its revised business plan.
Slater and Gordon had to present reorganisation proposals to lenders following a disastrous 2015 in which it reported half-year losses of £492.5m and a net debt rising to £380m by the end of December. Lenders gave the firm until the end of April to present a plan to turn around the business, or face having to repay debts by April next year.
Today’s deal extends the existing facility agreement on ‘substantially the same terms’ to ensure loans do not have to be repaid until May 2018. The firm will pay back A$480m (£250m) in the full year 2018 and A$360m (£187.5m) in the full year 2019.
Slater and Gordon has agreed to increase the frequency of reporting to lenders, restructure facilities as term loans and not to declare or pay any dividends.
Managing director Andrew Grech said: ‘We are both very pleased and grateful for the strong level of support that we have received from our lending group. We remain focused as a management team on executing our performance improvement programme across the business to improve profitability and cash flow, and reduce debt.’
He added: ‘We are confident that the amendments we have entered into today with our lending group provide us with the flexibility and time to execute and continue our performance improvement programme.’
The announcement caused Slater and Gordon’s share price to double to A$0.59 (31p) within hours.
As previously revealed in the Gazette, the rescue plan involves the closure of a number of offices across the UK, although it is not clear how many jobs will be under threat.
The firm plans to reorganise to create 'centres of excellence' in city centre venues, and to change its approach to noise-induced hearing loss claims, which were acquired mainly through the takeover of the professional services division of Quindell last year.