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3 reasons why the Slater & Gordon share price is sinking today

The Slater & Gordon Limited (ASX: SGH) share price has dropped 9.4% today to 24 cents at the close, not far off the low of 23 cents set last week.

For the year, shareholders, who have been holding on and waiting for the better times to arrive, have seen a 96.6% fall in the share price as the chart below shows.

Slater and Gordon share price Apr 2016

Source: Yahoo Finance

Here are 3 reasons why the share price might be falling today:

  1. News that Arrium Ltd’s (ASX: ARI) bankers had rejected a financing deal which would have seen them reportedly receive about 55 cents in the dollar. With $2.4 billion of debt, you could see why the bankers weren’t keen. Slater & Gordon has a similar issue with $783 million of debt due in a year’s time, and investors might fear that the company will be unable to refinance its debt.
  2. Fallout from the resignation last week of the law firm’s general counsel and company secretary Ms Moana Weir – just two months into the job.
  3. Shareholders may have finally realised that the company is unlikely to generate strong returns in future – even if it can recover from its current ails, with question marks over its accounting and there must be concerns over management and their acquisition decisions.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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