Banks unload Slater & Gordon debt at a massive loss

Eager to unload the debt, the banks were willing to take just a few cents on the dollar

Banks unload Slater & Gordon debt at a massive loss
Banks that owned a majority of Slater & Gordon’s debts have unloaded at a massive loss, recovering as little as 20 cents on the dollar.

Reacting to media reports about the sale of its debt, the troubled law firm confirmed to the ASX on Friday that it had been notified that more than 94% of its debt facility has traded from its original lenders to secondary debt buyers.

Westpac, National Australia Bank, Barclays, and Royal Bank of Scotland on-sold their holdings sometime Wednesday last week, the Sydney Morning Herald reported. Both the publication and the Australian Financial Review said the debt was purchased by hedge funds. The banks had acceded to losses of up to 80%, the AFR said.

The buyers are reportedly keen on a debt-for-equity swap, which will enable the ASX-listed firm to restructure but will significantly dilute other shareholders, SMH said. It said that a restructure of the firm couldn’t be agreed upon because Westpac and NAB were unwilling to take major stakes in the firm.

New York hedge fund Anchorage Capital will become the largest stakeholder in Slater & Gordon when the planned swap is completed, AFR said.

The firm and its new senior lenders believe a restructure via scheme “is in the best interest of all stakeholders.” Slater & Gordon was in danger of being put in administration over the weekend if a deal on its debt was not reached.

Last month, the firm reported a A$425.1m net loss after tax, due largely to a further A$350m writedown in the first half of fiscal year 2017. Debts were about A$740m, A$126m more than assets.

Related stories:
Lenders hold Slater & Gordon’s future as it posts $425m loss
Top barristers warned over Slater & Gordon’s money woes

Recent articles & video

ACT Bar Association welcomes new president

Western Australia district court welcomes new judge Mark Ritter

Marque Lawyers partner: 'I want to bring humanity back to the law'

Onboard data company Shift5 appoints inaugural general counsel

Canadian legaltech firm signs up seasoned vet for Australian debut

Federal Court rules registrar can reject ‘abuse of process, frivolous, and vexatious’ applications

Most Read Articles

HSF wins landmark case for insurance company

New CEO steps up at KCL Law

K&L Gates nabs HWL Ebsworth team

W+K expands Adelaide office with six new lawyers