SGH - Slater and Gordon

[joeno]

What the hell is going on??? It's basically crashing to $0

 

[Ves]

Yes. I would say so. But they're only proposals at this stage.

I was reading elsewhere that something similar happened in NSW at some point and the impact on legal firms there that relied on those sorts of frivolous claims was fairly big. Any info on this?

Apparently this move would save the UK government about 1 Billion pounds in claim payments a year (50% or so reduction). In times of low growth in Europe (and in some cases austere budgets), you'd think there wouldn't be much opposition to these proposals if they sell them as cutting out frivolous or borderline fraudulent claims, which they no doubt will try. Not like it's a high-profile public issue either AFAIK, so why wouldn't they wave it through?

 

[McLovin]

I was reading elsewhere that something similar happened in NSW at some point and the impact on legal firms there that relied on those sorts of frivolous claims was fairly big. Any info on this?

Apparently this move would save the UK government about 1 Billion pounds in claim payments a year (50% or so reduction). In times of low growth in Europe (and in some cases austere budgets), you'd think there wouldn't be much opposition to these proposals if they sell them as cutting out frivolous or borderline fraudulent claims, which they no doubt will try. Not like it's a high-profile public issue either AFAIK, so why wouldn't they wave it through?

Don't have any info on that sorry. I'll have a dig around. I believe it will save the insurance industry 1b pounds, not the government. But they're talking about 40-50 pound savings on car insurance which isn't exactly a hard proposition to sell.

Now how about that debt SGH used to buy a motor accident compo outfit in the UK...

 

[Ves]

I believe it will save the insurance industry 1b pounds, not the government. But they're talking about 40-50 pound savings on car insurance which isn't exactly a hard proposition to sell.

Yep, spot on. My error.

http://www.theguardian.com/uk-news/2015/nov/25/cash-payouts-whiplash-claims-banned-autumn-statement

 

[skc]

Yes. I would say so. But they're only proposals at this stage. The Tories are probably on the side of the insurers so I imagine they'll be trying their hardest to get this through.

I was reading elsewhere that something similar happened in NSW at some point and the impact on legal firms there that relied on those sorts of frivolous claims was fairly big. Any info on this?

Apparently this move would save the UK government about 1 Billion pounds in claim payments a year (50% or so reduction). In times of low growth in Europe (and in some cases austere budgets), you'd think there wouldn't be much opposition to these proposals if they sell them as cutting out frivolous or borderline fraudulent claims, which they no doubt will try. Not like it's a high-profile public issue either AFAIK, so why wouldn't they wave it through?

I remember posting something before about UK being the whiplash capital of Europe. Screwing the government is lucrative when it lasts, but doesn't always last too long. Who in their right mind (politician wise) would want to stand up and fight for the ambulance chasers?!

Talk about a perfect storm. I wonder if there'd be a recapitalisation... it's not a turnaround story. It's a "regulation makes revenue disappears overnight" story. Like MMS a few years back. The Australian business and other practice ares will certainly still retain value... but you'd think debt holders might even need a haircut at this rate.

Wouldn't it be funny if ASIC comes out tomorrow and give them the all clear?

 

[notting]

SHJ The dyslexics are shorting this too.
Not me but.

PRINCIPAL ACTIVITY
Shine Corporate Ltd (SHJ) is an Australian plaintiff litigation company
providing damages based litigation services in personal injury and emerging
practice areas. SHJ operates through its Incorporated Legal Practice, Shine
Lawyers Ltd, and has over 39 offices located across QLD, NSW, VIC and WA.

Announcement - Oh for God's sakes your halfwits -

"Shine Corporate Ltd confirms that it has no presence in the United Kingdom and that the proposed regulatory changes do not impact its operations"

 

[notting]

 

[McLovin]

Did they really not know change was coming? If you're in a highly regulated industry surely as part of due diligence you'd study the regulatory landscape and the prospects for change before splashing out $1b....Hmmm.

While the change has come as a surprise to Slater & Gordon, analysts were well aware of the potential for changes in the UK.

CLSA analyst Oscar Oberg told clients in September that industry contacts pointed to a potential regulatory change as an increase in the Small Claims Track from £1,000 to £5,000 damages.

"Following the UK election in May, conversations with our industry contacts have suggested the possibility of future regulatory change that may impact the UK personal injury sector," said Mr Oberg in his note.

This reflected the Conservative Party winning by a majority and the influence the insurance industry has previously had on the party in instigating change within the sector."

Read more: http://www.afr.com/business/legal/s...ury-law-changes-20151126-gl8iwz#ixzz3sZDx0IVt

 

[skyQuake]

Still cant believe news was out around 1am Aus time overnight.

My guess is shorters had no more ammo left - But they called up the co' and let them know they need to address this issue to keep the markets updated

 

[notting]

Still cant believe news was out around 1am Aus time overnight.

My guess is shorters had no more ammo left - But they called up the co' and let them know they need to address this issue to keep the markets updated

Guess that would make it a long then!

 

[skc]

Did they really not know change was coming? If you're in a highly regulated industry surely as part of due diligence you'd study the regulatory landscape and the prospects for change before splashing out $1b....Hmmm.

It's not like they were new to the UK. Their UK business was already larger than the Australian operations from memory.

Now.. their operating cashflow across the group was something like $40-50m. Assuming half from the UK which will be reduced by 50%, you get ~$30-35m.

SGS is worse because it's 80% fast track stuff (according to Macquarie)... you can easily assume that it won't make any cash.

SGH with $650m in debt @ 5% interest = $32.5m in interest expense alone.

It's bye bye SGH if the law gets passed.

Still cant believe news was out around 1am Aus time overnight.

My guess is shorters had no more ammo left - But they called up the co' and let them know they need to address this issue to keep the markets updated

I still can't believe no one picked it up this morning. I traded it before the announcement but really didn't know why the sell off accelerated after 2 days pause. I was flat going into the news but was able to re-enter at the match again.

I am also surprised that the news was marked "market sensitive"... it was immaterial to FY16 and not even passed as law yet. It would have been even better trade.

Now hands up who's even seen a Reg_Halt on an ASX100 stock.

 

[So_Cynical]

In the space of 6 months my SGH holding has gone from a $7000 open profit to a $700 open loss...and this is basically because i didn't want to pay tax on the profits last financial year, wanted to wait until 1st July, and then that ****ing bookbuild came along and i figured id just take that lazy $1000 on offer.



Actually my largest unrealised loss, matched this week as fate would have it by my largest ever single day unrealised gain...what's the chances of that.

 

[Rainman]

SGH's recent woes remind me of Claudius' line in Hamlet:

"When sorrows come, they come not single spies
But in battalions".​

 

[skyQuake]

Now hands up who's even seen a Reg_Halt on an ASX100 stock.

HA! At this rate everyone will be experts on Chi-X halts

Also, please return your borrow so I can get some

 

[McLovin]

Wow.

In August, Skippen told the Company Directors magazine that one of the most important considerations for the board of Slater & Gordon when it paid $1.3 billion for the Quindell business in the UK was assessing regulatory risk.

"People sometimes underestimate or don't understand regulatory risk in new markets," he said in a feisty interview that included an attack on hedge funds and short sellers.

"Every country has its approval process, which varies across industry, and it's easy to overlook how much damage can be done from legislative change."

Read more: http://www.afr.com/brand/chanticlee...regulatory-risk-20151126-gl93ff#ixzz3seCjmWmk

 

[skc]

HA! At this rate everyone will be experts on Chi-X halts

Also, please return your borrow so I can get some

NEVER!

Actually I only have minimal shorts overnight and actually traded long OK today as well.

Probably worth monitoring the shorts situation. I can see why the hedge funds might start to cover...

71M shares traded today and we are not even at lunchtime.

Wow.

Read more: http://www.afr.com/brand/chanticlee...regulatory-risk-20151126-gl93ff#ixzz3seCjmWmk

You can't write this stuff... Someone in your family is a writer? May be you can... but I am still shaking my head. Transformational acquisition... in every sense.

The truth will never really be known on why they go so hard and paid so much on QPP. Their acquisitions in the past usually isn't that much more than the WIP acquired. But with QPP they paid $1B in goodwill with some very questionable WIP to start with.

There is a theory that SGH was like a mouse in the wheel - its needs ongoing acquisitions and WIP growth in order to keep the story going... well they certainly went out with a massive BANG.

 

[McLovin]

It's not like they were new to the UK. Their UK business was already larger than the Australian operations from memory.

Now.. their operating cashflow across the group was something like $40-50m. Assuming half from the UK which will be reduced by 50%, you get ~$30-35m.

SGS is worse because it's 80% fast track stuff (according to Macquarie)... you can easily assume that it won't make any cash.

SGH with $650m in debt @ 5% interest = $32.5m in interest expense alone.

It's bye bye SGH if the law gets passed.

Yeah, I agree, especially re the fast track stuff. That, last Friday, was how they were going to get cashflow moving again, or at least that was my take on things! I can't even see a scenario where the laws get passed and SGH does a cap raising, there is just too much debt, and who would trust management now?

Who's going to file the class action against SGH?

 

[VSntchr]

Who's going to file the class action against SGH?
View attachment 65121

 

[chops_a_must]

We haven't seen a death spiral like this for a while!

 

[McLovin]

You can't write this stuff... Someone in your family is a writer? May be you can... but I am still shaking my head. Transformational acquisition... in every sense.

The truth will never really be known on why they go so hard and paid so much on QPP. Their acquisitions in the past usually isn't that much more than the WIP acquired. But with QPP they paid $1B in goodwill with some very questionable WIP to start with.

There is a theory that SGH was like a mouse in the wheel - its needs ongoing acquisitions and WIP growth in order to keep the story going... well they certainly went out with a massive BANG.

I'm shocked by it all. I haven't seen anything like this ever. I've seen plenty of bad acquisitions, but an acquisition that goes so bad, so soon, and is big enough to sink the acquirer. Never. And all the reassurances on top of that...

I am flabbergasted.