Slater and Gordon shareholders have voted in favour of a recapitalisation plan that hands control of the law firm to its lenders and sets the stage for a boardroom cleanout by December.
Almost 70 per cent of votes at Slater and Gordon’s annual general meeting in Melbourne on Wednesday backed the plan which will see hedge funds led by New York-based Anchorage Capital assume control in a debt-for-equity deal.
Chairman John Skippen told shareholders the board understood the deal was ‘disappointing’ but the only way to secure a future for the firm.
‘The recapitalisation is essential for Slater and Gordon to avoid insolvency,’ he said.
Slater and Gordon’s value has plummeted and its debt has soared in the wake of its disastrous expansion into the UK, via the $1.2 billion acquisition of the professional services division of the firm Quindell in 2015.
It has faced several class actions related to its market disclosures in the wake of the firm’s acquisition and subsequent losses and writedowns.
Slater and Gordon’s market value fell from $2.8 billion in April 2015 to a low of just $25 million in March.
Mr Skippen said he would remain as chairman until the deal was finalised, most likely in December, after which the new owners will appoint a new board of directors.
Slater and Gordon shares were up 0.6 cents at 4.4 cents at 1531 AEDT.