International giant will now look at “a range of strategic options”
King & Wood Mallesons (KWM) has revealed that a planned £14 million partner-funded lifeline to cover the firm’s debts has not been given the go-ahead.
Back in October it emerged the firm’s partners were holding “crisis” talks over KWM’s debts — believed to be in excess of £25 million — when four of the outfit’s top senior lawyers decided to head for the exit.
Putting recapitalisation plans on hold, the firm quickly issued a statement confirming that “in light of these resignations” KWM was pressing pause on the scheduled programme, that would have seen partners inject some of their own cash into the firm.
Several weeks on and the international giant has now revealed that the recapitalisation programme — which many viewed as a vital lifeline for the firm — will now no longer go ahead. In a statement released in the past hour, a spokesperson for KWM said:
It was announced today that King & Wood Mallesons EUME has not been able to complete its planned recapitalisation programme. The programme was paused at the end of October 2016 whilst the firm assessed the financial impact of a number of partner departures. Having completed its assessment, a revised plan was submitted to the EUME partnership under which the same level of new partner capital was required, but with the financial support of the verein member firms. Regrettably, insufficient value of new capital was committed.
According to the statement, the firm will now consider “a range of strategic options” including the possibility of a merger. Continuing, the spokesperson said:
The firm will continue to service the needs of clients, operating on a business as usual approach. The EUME partnership board and management are considering a range of strategic options, including mergers, in conjunction with the firm’s bankers and financial advisers. A further statement will be made in due course.
The megafirm — the amalgamation of three recent mergers between top City of London player SJ Berwin, Chinese market leader King & Wood and Australian giant Mallesons — has lost over 50 partners in the last year, making up just 25 new ones through lateral hires.
Legal Cheek understands that all staff have been asked to attend a meeting scheduled for later today. More as we get it…