Andrew Grech has stepped down from his position as group managing director of Slater and Gordon with immediate effect following the announcement of a recapitalisation agreement led by Anchorage Capital Group.
The announcement, made to the Australian Stock Exchange, explained that Grech will stay on as a non-executive director in the short-term until a replacement is found to fill his role.
The hedge fund, which now has 50% control of the Australian law firm, has also pushed through demands, along with a number of other lenders, for all existing directors to resign in due course. It said that the new board would be made up of seven directors, with Anchorage being entitled to nominate four non-executive directors. The other lenders will be free to nominate two non-executive directors. All of the lenders would be entitled to appoint the remaining director.
Anchorage, together with Hong Kong’s Davidson Kempner and US funds York Capital Management, Taconic Capital and River Birch Capital, now represent 75% of of the firm’s secured debt. Once the recapitalisation agreement is implemented, the group will have about 95% of Slater and Gordon’s equity, along with two original lenders, Merrill Lynch and Deutsche Bank, who have retained a small stake, according to The Australian.
Existing shareholders will only hold 5% of the the firm after the recapitalisation and this could reduce to 4% if some warrants are exercised.
Anchorage and the other lenders will also be entitled to up to £250 million of any damages that Slater and Gordon wins if it is successful in its proceedings against Watchstone (the company formerly known as Quindell).
The firm said that the recapitalisation was intended to provide it “with a sustainably level of senior secured debt” and a stable platform for its future operations in both Australia and the UK.
Grech offered to resign last year after Slater and Gordon revealed that it was to close a number of its offices in the UK and reduce its employee headcount after posting a £494 million loss in the second half of 2015. The drastic descaling exercise was forced on the firm after the severe underperformance of its UK noise-induced hearing loss case book, which it bought from Quindell in 2015.
The board rejected his resignation however, and said that it intended to reorganise its operation into three specialised legal services divisions dealing with fast track PI claims, serious PI claims, and general law services.