A legal-eagle disaster without precedent

Cartoon: Peter Nicholson.

There are few heads left to lop in the search for accountability at listed law-firm disaster area Slater & Gordon.

The once-proud labour law firm is on its knees after taking a swingeing $876 million writedown on the ill-fated British business Quindell it bought less than a year ago for $1.3 billion, with bankers owed $780m demanding a repayment plan pronto, support from its traditional trade union customers evaporating and rival firm Maurice Blackburn mulling a shareholder class action.

Shares in S&G that eight months ago were worth close to $8 plunged again yesterday, falling 30 per cent to just 58c, as boss Andrew Grech and chairman John Skippen promised to stick around after unveiling a $958m half-year loss.

Little wonder that S&G’s staunchest critic, hedge fund VGI Partners, can’t find any more stock to borrow so that it can short the company.

It’s said S&G’s banking syndicate, led by Westpac, owed up to $300m, and NAB, with stakes also held by Macquarie and Citi, wants Grech and Skippen’s insights on hand as they work towards the April 30 deadline for a repayment plan to be up and running.

If they come up trumps the pair can expect hearty thanks and directions to the exit door.

Others with financial oversight at the company have already been sidelined. Ian Court, who’s also on the board of Canberra Defence HQ builder Praeco, where Malcolm Turnbull is an investor, was in October replaced as audit committee chairman by James Miller, formerly a bigwig at S&G’s new auditors, EY.

EY replace Pitcher Partners, who “resigned” in December. CFO Wayne Brown has also “stepped down”, replaced by former banker Bryce Houghton.

Choosing EY as auditors has raised eyebrows, as the big four firm was responsible for accounting due-diligence work on the Quindell deal, on which Roger Feletto’s boutique Greenhill advised.

Meanwhile, S&G’s traditional union clients have been quietly moving their business away from the company. Last year’s 7 Eleven wages scandal, during which it emerged S&G was on hand for Russ Withers’ empire, caused Trades Hall fury, but before that the uber-troubled HSU shifted its hefty $1m-a-year mandate to Morry B and McNally Jones in 2012. Victoria’s powerful Police Association also went to MB in 2014.

Sign of the Times

There’s still plenty to be nutted out if News Corp — publisher of this newspaper — is to sell Perth masthead the Sunday Times to Kerry Stokes’ Seven West Media, publisher of The West Australian. Margin Call understands exploratory conversations have been undertaken in a bid to solve one of the big stumbling blocks to a deal in WA: AFL match reports in the footy-mad state.

The idea is that Times readers would continue to enjoy all the east coast action currently carried in the paper, thanks to a syndication agreement.

Keeping up with Jones

Great to see RAMS co-founder and former Allco exec Greg Jones has bounced back from his mistreatment by NSW’s ICAC, joining the board of US penny stock dot.com Ubiquity.

No findings were made against Jones, who spent a day in the witness stand in 2013 being grilled over his relationships with Eddie Obeid and former ALP minister Ian Macdonald.

He was asked questions about whether Macdonald was somehow linked to a handwritten note containing a list of dollar amounts alongside projects, including Cascade Coal, where he invested alongside RAMS buddy John Kinghorn, and the V8 Supercars.

If only Jones had Ubiquity’s technology at the time — it’s blurbed as bringing all your social networks together at once, no doubt making figuring out who’s done what a breeze.

These days he runs his own outfit, Kee Capital Group, and lives in a condo in one of Hong Kong’s priciest towers, 39 Conduit Road. Sadly Kee co-shareholder Ken Deayton didn’t return our call seeking Jones.

Investor bargains

With the stock price in the bespoke toilet, the Carol Schwartz-chaired Temple & Webster is taking a novel approach to drumming up sales.

There’s only two days left for buy and sell side analysts tracking the homewares e-tailer to take up the generous 10 per cent discount offer they were extended on the last page of a profit warning investor preso issued last week. With shares closing down again at 21c, against $1.10 in December’s IPO, every cent counts.

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