LiveTiles shareholders snub delisting proposal

LiveTiles shareholders snub delisting proposal

Last month workplace and employee engagement software outfit LiveTiles (ASX: LVT) proposed exiting from the ASX for a variety reasons, ironically including the difficulty of attracting staff due to what management believe is a chronic undervaluation for the fast-growing company, but a vote today showed shareholders were unconvinced.

Shareholders voted 57.21 per cent against the delisting in proxies at an extraordinary general meeting (EGM) held this morning, while the percentage was slightly higher in a poll.

With global customers including Pepsico, Novartis and many more for its software that can be integrated into major workplace software platforms like Slack, Salesforce and Google+, LiveTiles reported $52 million in operating revenue in FY22 and an EBITDA of $3 million.

In the initial announcement for the delisting, the group claimed the trading share price had underperformed consistently at a level lower than valuations "of unlisted companies of a comparable nature and stage".

This message was reiterated by chairman Dr Marc Stigter in his address to the EGM, emphasising a strong belief that LiveTiles’ valuation would have a greater prospect of growing towards a fair value as an unlisted company.

He explained that while the company had no intention to raise equity capital in the near term, any future capital raising could further pressure and dilute the LVT share price.

"We also believe that as an unlisted company, we could have access to a broader universe of technology-focused, global institutional investors, including those who currently are unwilling or unable to invest in ASX-listed companies for instance due to investment mandates," the chairman said.

"Furthermore, trading in LiveTiles’ shares has been relatively illiquid contributing to high volatility in our share price. Low liquidity has also hindered the Company’s ability to secure broad institutional ownership.

He added a delisting could also facilitate greater flexibility at a time when there was an opportunity to rationalise and reposition LiveTiles' portfolio of software products to drive incremental sales growth over the medium term.

"We feel that pursuing such a strategy whilst under the short term pressure of quarterly financial reporting cycles could lead to increased volatility in the Company’s share price," he said.

"Coupled with this, we believe that the ongoing administrative, compliance and direct costs associated with the Company’s ASX listing are disproportionate to the benefits of remaining listed.

"Finally, we feel that a continued depressed share price does negatively impact on employees’ decisions to join or remain at the company and does dilute the employer brand equity of LiveTiles."

Had the initiative passed, the delisting would have meant any shareholders wishing to sell would have needed to make off-market private transactions. 

LVT shares initially dropped on the delisting rejection this morning but have since risen by 1.96 per cent since opening at just over 5 cents each. This compares to a valuation at 16 cents per share 12 months ago and 68 cents per share in mid-2018.

The Melbourne-founded group established in 2014 and led by co-founder CEO Karl Redenbach had a market capitalisation of $47 million at yesterday's market close.

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