Legal firm Slater & Gordon (ASX:SGH) has seen higher than usual trading volumes in its shares following the announcement yesterday that senior lenders approved its proposed recapitalisation scheme, which will see a number of shares issued following a 100-for-1 share consolidation.
This will effectively reduce the company’s current share capital from 347.2 million shares to 3.5 million, decreasing the total number of shares held by each shareholder.
In addition, the company will issue shares to senior lenders, diluting shareholders’ interest by 5 per cent of the company’s total share capital.
Shareholders can vote for the recapitalisation at the company’s next AGM, which the company’s directors are encouraging a vote in favour of the recapitalisation.
The company said if a positive vote is not reached at the AGM, it will need to re-assess the insolvency of the company, as the level of debt will be unsustainable.
Shares in Slater & Gordon (ASX:SGH) are trading 17.31 per cent lower to 4.3 cents a share.