Slater & Gordon Limited shareholders vote for mercy

Slater & Gordon Limited's (ASX:SGH) creditors scored a win at today's AGM.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Slater & Gordon Limited (ASX: SGH) share price is rising today after the indebted law firm revealed its special AGM motions to issue new shares under its special lender scheme and effect a 1 for 100 share consolidation had been approved by shareholders.

As such that means a shareholder who owned 10,000 shares today will be left with just 100 soon in addition to suffering heavy dilution via the issue of new equity to the lawyers' hedge fund creditors.

That's the bad news, but the good news is that the restructured firm will have most of its crippling debt profile written off and avoid bankruptcy.

Slater & Gordon shareholders have been locked in a US creditors' double Nelson for a while now, with its big bank creditors such as National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) already taking substantial haircuts in selling off the debt owed to them at chunky discounts.

Today the stock has climbed 26% to 4.8 cents on the news, although the guide as to what the actual value of the equity could be worth under the restructure agreement is contained within the 483 page "explanatory statement" over the recapitalisation terms.

Slater & Gordon shares remain an avoid as the group remains in a position where the total value of its bank debts far exceeds the total equity or enterprise value of the company. In other words the shares have a negative value unless a rescue deal is implemented on virtually non-negotiable terms dictated by creditors.

Motley Fool contributor Tom Richardson has no position in any of the 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »