Barry Maloney, the chairman of Irish tech firm Workhuman, expressed “shock” and outrage at the timing of a proposal to fundamentally change the relationship between the company and one of its shareholders on the eve of agreeing a big acquisition last year.
Transcripts of phone calls, seen by The Irish Times and filed in a London court last month, reveal fresh details of the collapse into legal acrimony of the relationship between the human resources software company and Intermediate Capital Group (ICG), the private equity firm that invested millions in the Irish business in 2020.
The documents were filed in the High Court in London last month as part of a case management hearing in late October.
Separate cases are ongoing in Dublin and in London, where Mr Maloney wants the High Court to approve an arrangement for him to pay back and redeem ICG’s interest in Workhuman.
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In a separate action, Workhuman filed a conspiracy claim in the High Court in Dublin against ICG and various individuals late last year, seeking damages over the failure in the spring and summer of 2023 to acquire Achievers, a HR tech firm, from its majority shareholder, US private equity firm Silver Lake.
The company was seen within Workuman as a potentially transformative to the business.
Mr Maloney, who is not party to the Dublin proceedings, was not available for comment.
ICG has roundly rejected WorkHuman’s claims. “We are unable to comment due to ongoing legal proceedings. However, we reject the claims entirely as without merit. We are confident in our position and ultimate outcome in these proceedings,” a company spokesman said.
Transcripts of phone calls between Mr Maloney and ICG managing partner Bernie Coady filed in the London case underline the tensions between the WorkHuman chairman and ICG in the days before the Achievers deal collapsed.
During a phone call on March 30th, 2023, Mr Coady told Mr Maloney that ICG wanted to “try and move out and form a debt-led transaction” for Achievers, essentially moving from an equity position in Workhuman to a senior debt position.
By exiting its equity stake, Mr Coady said ICG would “move into more of a debt-orientated transaction than certainly the 10 per cent direct equity stake that we had in the business”.
“We felt that would be a neat solution because also by virtue of us getting rid of our equity that’s giving enough liquid equity to all parties, yourself and management included which is being funded by [ICG],” Mr Coady said.
Mr Maloney expressed “shock” at the timing of the suggestion. He said he had left a meeting with ICG’s investment committee the previous Friday “100 per cent convinced” that the deal for Achievers was “absolutely done”.
“I have spent the last six months negotiating this term sheet with Silver Lake,” he said. “Along that journey – I brought you on that journey with me – I updated you more than anybody else with the progress I was making with Silver Lake and you kept telling me, ‘Barry this is a no-brainer, my [investment committee will love this. You should not and need not be concerned about this’.
“I have Silver Lake on my ass for the last 24 hours and they know I am avoiding them and you guys have put us in this position. I cannot even start to express to you my feelings about this Bernie. I can’t even start. It is outrageous.”
Mr Maloney told Mr Coady that Workhuman “just can’t” take on the level of debt required to get that proposal off the ground. Workhuman subsequently said on affidavit the proposal would have increased the company’s debt pile by $450 million.
In a follow-up phone conversation on March 31st, Mr Coady said ICG wanted to “change the nature of our investment in light of what’s happening and the timescales”. He said: “We don’t want to stand in the way of the transaction but if we can’t facilitate a different deal for us, then we need to facilitate an exit for us.”
Mr Maloney asked Mr Coady to clarify ICG’s position. He asked Mr Coady if he was implying that unless WorkHuman accepted the more debt-led package for Achievers, “or we enable an exit for you, you are not going to approve the deal”.
“I wouldn’t have phrased it exactly that way Barry, but yes, that is correct,” Mr Coady said in response.
The Irish High Court case was up for mention earlier this week and was adjourned to later in the month. Mr Maloney’s case in London, meanwhile, is expected to kick off in earnest in the new year.
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