The LiveTiles Ltd (ASX: LVT) share price has come under pressure on Thursday morning.
In early trade the intranet and workplace technology software provider's shares are down 2.5% to 21 cents.
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Why is the LiveTiles share price sinking lower?
Investors have been selling the company's shares following an announcement after the market close on Wednesday in relation to legal proceedings.
In mid 2018, the company revealed that the company had been added to proceedings concerning a shareholder dispute in respect to companies unrelated to LiveTiles and involving the cofounders of LiveTiles. The proceedings were brought by CEO Karl Redenbach's brother, Mr Keith Redenbach.
At that point, LiveTiles advised that it regarded the claim as frivolous and without merit.
Unfortunately, things didn't stay that way and the company has just announced the settlement of the legal proceedings, at some cost.
What happened?
According to the release, under the terms of the settlement agreement, LiveTiles will pay $8.445 million to the plaintiffs, and the LiveTiles Co-Founders Karl Redenbach and Peter Nguyen-Brown will transfer a total of 16,279,070 ordinary shares in the company to a nominee of the plaintiffs. Approximately 11.9 million of these shares will be subject to voluntary escrow conditions.
At the end of FY 2020, LiveTiles posted a statutory net loss of $31.6 million, leaving it with a cash balance of $37.8 million. This settlement will reduce its cash position to below $30 million, before taking into account any cash burn during the first quarter.
LiveTiles' Co-Founder and Chief Executive Officer, Karl Redenbach, was pleased to resolve the matter. He also revealed that the company had a strong first quarter.
He commented: "We are pleased to resolve this matter, and to focus all of our attention and energy on the continued growth of LiveTiles. We have just completed a very successful quarter with a strong cash balance and look forward to sharing the results with shareholders in our Appendix 4C update and investor conference call next week."
