Nuix sell-off adds to Sheehy’s potential damages

Myriam RobinColumnist

Feb 28, 2021 – 7.16pm

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A mere three months after floating, Macquarie-backed Nuix was sold off 32.4 per cent on Friday, investors not having liked its revelation of a “softer” first quarter.8

It’s never a good look when a company surprises the market a matter of weeks after compiling its prospectus. On the other hand, in closing the week at $6.06, Nuix is still slightly above its $5.31 IPO price, but well down on highs of $11.16, reached this time last month.

It’s been a wild ride for shareholders including Macquarie (which retained a 30 per cent stake after the float), Washington H. Soul Pattinson, and Yarra Capital Management. And for former chief Eddie Sheehy, who is fighting the company for millions of cheap options he argues he is owed.

Sheehy commenced legal action last October arguing that he was unfairly prejudiced when all shareholders except him had their shares multiplied 50-fold, the effect of which was to dilute his stake from 22.7 million options and shares (worth $118 million at the float price) to a mere 453,272 (worth a tiny fraction of that). The company is defending the claim, which is ongoing, and slowly making its way through Sydney’s Federal Court.

As this column noted last December, the whole thing could turn into an ungodly mess for Nuix if, firstly, Sheehy wins, and, secondly, if Nuix’s share price first rises then falls. His damages could then be expected to include compensation for his inability to sell out of more than 7 per cent of the register at the top.

With Nuix trading at around half its peak, it has only taken three months for one of those two circumstances to come to pass. It’ll be months before a resolution, but we’re calling that an ill omen.

Myriam Robin is a Rear Window columnist based in the Financial Review's Melbourne newsroom. Connect with Myriam on Twitter. Email Myriam at myriam.robin@copyright link