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Slater & Gordon Limited just updated the market on its survival battle

Debt burdened law firm Slater & Gordon Limited (ASX: SGH) informed the market this afternoon that it has arranged to borrow another $40 million from its new lenders in news that may provide some relief to its embattled shareholders.

The law firm stating: ”The New Facility has a three year term and will provide the Company with working capital headroom as it continues to execute its plan to restore its financial performance”.

At its most recent update the law firm conceded it still has $737.6 million in bank debt and is still losing money thanks largely to the disastrous performance of some of its UK operations.

Today its shares change hands for just 9 cents, but I would not be tempted into buying any on the back of today’s news as I expect the group may eventually have to agree to a deal that sees its lenders write off some of the debt in exchange for virtually all the equity in the group.

In effect this could all but wipe-out existing shareholders, while the elimination of the debt mountain would offer the group a better chance to continue as a going concern.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

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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