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The head of beleaguered law firm Slater and Gordon has quit and the board will be cleaned out under a shake-up that passes almost full ownership of the company to its lenders.
Under a recapitalisation announced on Thursday, lenders, led by Anchorage Capital and holding three-quarters of Slater and Gordon's secured debt, will take 95 per cent of the company's stock, but the deal has several conditions including settlement of an outstanding legal proceeding.
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Law firm Slater and Gordon reports a net loss of $425 million in the six months to December 31. (Vision courtesy ABC News 24)
Managing director Andrew Grech has quit his role, effective immediately, but will remain on the board, with all directors to resign as new board members are appointed by the new lenders.
"The recapitalisation is intended to provide the Company with a sustainable level of senior secured debt and a stable platform for its future operations in both Australia and the UK," the company said in a statement to the Australian Securities Exchange.
Slater and Gordon has been in restructuring talks with lenders for months.
The deal requires shareholder approval, with Slaters' board of directors in unanimous support and pledging to vote their shares in favour of the deal.
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Among conditions for approval are an independent expert concluding that the law firm will be solvent and that the deal is either "fair and reasonable" or "not fair but reasonable" to shareholders.
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