Slater & Gordon shares crash to just 32 cents as the curse of Quenron savages value - target ZERO

Comments

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   Drunken Sailor

   1 March 2016, 05:48

   http://www.heraldsun.com.au/business/breaking-news/shareholders-poised-to-sue-slater—gordon/news-story/274a08837cdcfe8d25d52ece469be3c1

   Slater & Gordon class action near certain

   Slater and Gordon is “almost certain” to face a class action from shareholders who have seen more than 90 per cent wiped off the value of their investment in the law firm.

   Rival legal outfit Maurice Blackburn says the near $1 billion loss unveiled on Monday by Slaters was further ammunition for the potential class action it first announced in December.

   Maurice Blackburn has been contacted by more than 2,000 shareholders since inviting so-called mum and dad investors to join a class action over the timeliness of the release of financial information.

   “Today’s announcement … strengthens the themes our class action investigation is pursuing, and although we still have some work to do, it now seems almost certain that we will file a class action on behalf of the thousands of aggrieved shareholders,” Maurice Blackburn’s national head of class actions Andrew Watson said in a statement.

   A second class action is also in the offing after Sydney-based ACA Lawyers said it had secured backing from two litigation funding groups for a case of its own.
   “The directors have a lot of explaining to do. It was only in November shareholders and the market were being told the company was in good shape,” ACA Lawyers principal Bruce Clarke said.

   The huge loss was driven by a $876 million writedown, the vast majority of which was against the UK business it acquired last year.

   Concern over the shape of those assets has been behind the 90 per cent decline in Slater and Gordon shares since April.

   Investors spooked by the law firm’s need to make adjustments to its financial reports in September watched as Slaters reaffirmed and retreated from its full year guidance before promising and cancelling a cashflow update.

   It then suspended trading in its shares last week while it finalised the impairment that led to the massive $958.3 million first half net loss.

   “The sheer size and scale of this writedown casts enormous doubt on the adequacy of disclosures made by Slater and Gordon in relation the true value of the Quindell assets, from the time of the transactions announcement right through until today,” Mr Watson said.

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   Russ O'Callaghan

   1 March 2016, 07:19

   A question really. Can they make out a case against Quindell (as was) for possible falsified book-keeping leading up to the sale? I mean, I know they did weeks of diligent research (we obviously have to use that adjective in its very widest sense) before writing a cheque, but, if the vendor was putting out misleading figures in the first place what constitutes “due diligence”?
   If you go out and buy a used car based upon such stuff as accurate mileage on the clock and regularly kept service records which you discover after the sale to be baloney then, generally, you have some sort of case.
   I know “caveat emptor” and all that, but, in this case, how can an “emptor” expect to “caveat” when the figures are short-listed for the Booker Prize?

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   Drunken Sailor

   1 March 2016, 08:12

   Russ,

   Your car analogy is covered by the Sale of Goods Act, this is a corporate transaction where both parties are supposed to know what they are doing. SGH needed to put clauses into the contract and it looks like they did not. The current management clearly still do not want to admit that they fucked up. They talk about poorer performance than expected, they have restated their own WIP based on new rules and they crap on about the Osborne changes. They talk about shutting down some businesses as part of consolidation and reorganisation. No where does it say and we are writing off $m on this part because it was a complete fraud that was always totally worthless, yet we still paid for it.

   Some of this is pride, some is not giving any more ammunition to the Class Actions and a big part is they have to convince their banks that they can turn this cluster fuck round. I hear what Tom says about who would be able to run the business better than the current management. Oakley probably could have done a better job at avoiding the cluster fuck in the first place, he does listen to Tom occasionally, especially around feeding time. But seriously there must be sound businessmen in Oz, they can’t all be David Lenigas, Alan Bond and Pete Landau clones. As part of any revised financing deal, the banks should install a management team they have faith in. The first thing that management team should do is get back the money in escrow – why put money in escrow in the first place? The next is to tell WTG to whistle for any NIHL payments and then they should get a really smart lawyer (Ie not one of the 70 odd who were involved in “the best due diligence ever”) to have a really good look at the contract and what was passed over during the due diligence to see if there is some sort of case for getting some money back from WTG. I can’t see how they are ever going to survive, let alone make enough to pay off the debt, if they do not at least do those first 2 things. Even then the Class Actions may well kill them.

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   Russ O'Callaghan

   1 March 2016, 10:15

   Thanks, Drunken Sailor. I must admit I’d totally forgotten about that escrow deposit. I’d certainly think that that, at least, is now going to become a bone to be growled over.

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   Drunken Sailor

   1 March 2016, 12:09

   Russ,

   It would seem WTG shareholders agree. Despite Tom “tipping” WTG for a rise and me posting that bearcast saying it was due for a rise, there has been no rise in WTG. Indeed they are down slightly since SGH results – all good news for my fantasy short in the Shareprophets longs and shorts of 2016 competition – I am one of the few that are ahead on both tacks at the moment, which will no doubt mean by the end of the year POG (my long) will have crashed and WTG (my short) will 10 bag. I have only won SP fun competitions twice, most of the time I get it as badly wrong as a BBM picking AIM 10 baggers.