Tuesday, December 5, 2023

Workhuman founder claims some investors are obstructing major acquisition deal

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The founder of Workhuman, a company that provides cloud-based services to recognise and reward employees, claims certain investors have engaged in a campaign of interference and obstruction to prevent a major and “transformative” acquisition deal.

Eric Mosley, chief executive officer of Dublin and Massachusetts-based Globoforce Group plc, trading as Workhuman, has claimed a conspiracy to damage Workhuman was effected through a variety of unlawful means.

These included a scheme of misrepresentation and intimidation, to force Workhuman to accede to a proposal that would have placed the company under an undue financial and operational burden, he claimed.

It was also done through a campaign to prevent the company from effecting a capital restructuring that would have brought about the repayment of a debt, it is claimed in the Commercial Court..

Globoforce/Workhuman is suing Luxembourg Investment Company 276 SARL (LuxCo) and global alternative asset management firm Intermediate Capital Group plc (ICG) which is listed on the London stock exchange. ICG is the parent of a number of companies, including ICG Europe Fund VIISCSp (FundVII) which holds LuxCo’s shareholding in Workhuman.

It is also suing an indirect investor behind a number of companies in the Luxembourg-registered Falcon Group. It is suing six executives/directors of ICG: Benoit Durteste, David Lomer, Hadj Djemi, Luigi Bartone, Sam McKelvey and Bernard Coady, ICG’s managing director and point of contact with Workhuman.

A seventh individual, Stephen Welch, of Rodimus Operations, Park Road, London, is also being sued, although Workhuman says there is no allegation of wrongdoing against him. It is claimed Mr Welch is a “professional director” who was invalidly appointed to Workhuman.

The case came before the Commercial Court on Monday, when Mr Denis McDonald was told there was consent for its entry to the commercial list.

However, the judge adjourned the entry application for a week to allow Mr Welch to be served with the papers outside the jurisdiction and for him to enter an appearance in the case.

In an affidavit, Mr Mosley said the company has more than 320 customers and more than six million employee users worldwide spanning 180 countries. Its turnover in 2022 was US$1,133 million, he said.

Between September and March last, he said, Barry Maloney, chairperson and director of Workhuman, conducted extensive discussions with the main shareholder of a company Workhuman was looking to acquire. For commercial sensitivity reasons, that company is not named, he said.

Mr Mosley said the acquisition was proposed as an all-equity deal which would not have involved cash consideration but, if executed, would have significantly enhanced the scale and growth opportunities of both companies.

Last March, he said, the defendants “opportunistically sought to block the acquisition at the eleventh hour in an attempt to procure substantial benefits for ICG and its affiliates, to which they had no entitlement.”.

As a result of a breakdown in the relationship between Workhuman and ICG, Workhuman decided it was appropriate that ICG’s influence, through its direct and indirect shareholdings, “should be addressed”, he said.

In response to steps taken by Workhuman, the defendants have “orchestrated and continue to operate an unlawful campaign to obstruct, block, frustrate and intimidate the company, and others, including the company’s board of directors, in an attempt to continue to apply pressure and exercise leverage” over Workhuman.

In doing so, the defendants have caused potentially irreparable damage to the company, its business and the interests of its shareholders, he said.

The claims are denied.

Globoforce/Workhuman is seeking declarations including that Stephen Welch was not validly appointed a director of the company and that Barry Maloney is and continues to be a director.

It seeks, as necessary, injunctions prohibiting Mr Welch from acting as director and the withdrawal of a notice of September 19 last purporting to direct the removal of Mr Maloney as director and putting Mr Welch in his place.

It also seeks a declaration that Mr Maloney has continuing authority to act for and on behalf of the Falcon companies as investor director on the board of the company. It also seeks financial compensation arising from the defendants’ alleged conduct.

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