Litigation Capital Management (LIT), an alternative asset manager that finances legal disputes, plunged today after the company was hit by the latest in a string of courtroom defeats that have pushed the Australian business deeply into the red.
Shares in the AIM-listed company tumbled 16p, or 60%, to 10.6p after the High Court in London ruled against an LCM-funded party in a commercial litigation case. They have slumped 99% from 117p last November valuing the company at just £12m.
In a short statement the Syndey-based company said it had contributed £9.9m (A$20.6m) of its own capital with a further £6.1m (A$12.7m) from the Fund 1 it manages. At 30 June the investment was held at a fair value of £26.5m (A$55.3m) on its balance sheet. This is likely to be written down though its adverse costs risk is covered by ATE Insurance.
“LCM will now review the judgment which has just been released and assess potential next steps alongside the funded party and legal representatives,” it said.
The latest legal setback followed the publication of annual results this morning that showed the company incurred total losses of A$82m in the year to 30 June after making A$44.7m of income in the previous 12 months.
This led to a post-tax loss of A$79m down from a post-tax profit of A$12.7m in 2023/24.
Chief executive Patrick Moloney said this was the result of an “unprecedented number of adverse case results” with six wins and six losses and a further three defeats that were under appeal.
“Disappointingly, several of the adverse outcomes were for cases where we had invested significant shareholder capital. While these results are reflective of the inherent binary risk in our asset class, they have fallen well short of our expectations and historical benchmarks,” said Moloney.
Last month the company wrote off a A$30.8m (£15m) investment in a class action brought on behalf of commercial fishermen against Gladstone Ports Corporation for alleged losses resulting from a toxic dredge spill in 2011-12.
The decision to terminate the case came after a review of LCM’s legal portfolio as the company launched a strategic review with corporate adviser Luminis Partners exploring possible asset sales, financing and partnerships.
It said it had held “constructive” dialogue with its lender and had halved operating costs in preparation for putting the business into run-off so as to realise value for shareholders from its remaining investments.
