Unwired Planet, Inc. (UPIP) Unwired Planet to Divest Patent Business Conference April 6, 2016 5:00 PM ET
Lauren Sloane - IR
Boris Teksler - CEO
Richard Chernicoff - Chairman
Good day and welcome to the Unwired Planet Conference Call. Today's call is being recorded. And at this time, I would like to turn the conference over to Lauren Sloane. Please go ahead.
Thank you. Good afternoon and thank you for joining us today. Joining me on this afternoon's call is Boris Teksler, Chief Executive Officer and Richard Chernicoff, Chairman and the Board of Directors for Unwired Planet.
Today we will just talk the recent announcement and the strategic rationale behind the company's decision post-IP business as recently announced at the close of market today April 6. If you have not seen a copy of the press release, you can find it on our website at www.unwiredplanet.com. For your convenience, this call is being recorded and will be available for playback from our website.
Further, any remarks that maybe made on this call are included in our press release about future performance, plans, objectives and strategies of the company constitute forward-looking statements, which are pursuant to the Safe Harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934.
Such forward-looking statements do not constitute guarantees of future performance and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements. We assume no obligation to update any forward-looking information discussed on this call and we encourage you to refer to the Safe Harbor language included in our press release and our periodic reports filed with the SEC, which describe risk factors that may impact our future results.
I'd like to note that we have also posted a presentation on the company's website which we will refer to during the following prepared remark. You will find the presentation available on the Investor Relations website under Events at www.unwiredplanet.com/investors.
With that, I'll turn the call to Rich.
Thank you, Ms. Sloane, and good afternoon everyone. Thank you for joining us on today's call. We'd like to spend some time this afternoon discussing our announcement that was entered into an agreement to divest our Patent Business. We're going to start by providing additional background on the deal, then explaining the rational for the transaction and finally our go-forward strategy.
Unwired Planet is a long way from the $6.3 billion phone.com's software.com during 2000. In anticipation of our next transformation, we've made significant changes in our board notably Jess Ravich, Peter Reed and Steve Wilson and I have extensive knowledge and experience in mergers and acquisitions, investment management and finance.
We created a strategic committee of our board last summer to explore ways to enhance stockholder value and provide Unwired Planet with financial stability. One of the alternatives included the possibility of selling our Patent Business and option became more attractive based on changes in the legal system and political landscape, as well as our financial resources.
With the sale of the Patent Business, Unwired Planet is now positioned to proceed to the next step of corporate development and delivering enhanced stockholder value. We believe we are now positioned to build a profitable investment management business that will utilize our net operating loss carryforward.
Under the purchase agreement, Unwired Planet will receive approximately 25 million net cash at the closing of the transaction, an up to an additional 10 million in cash two years after the closing. We expect to close the deal in late June or July of 2016. You can find additional details in the presentation and in the purchase agreement that we will file with the SEC today.
Before I discuss our go-forward strategy, I'd like to turn the call to Boris so he can discuss the recent litigation facility having impacted our decision to ultimately sell the IT business.
I would also really like to thank Boris for achieving great results in his limited time as Chief Executive Officer of the Company. Boris and his team turned a failing track record of litigation results into a string of victories that arguably some of the most important rulings for LTE standards, essential patterns and will undoubtedly impact the future of FRAND licensing.
With that, I’ll turn it over to Boris.
Thanks Rich and hello everyone. I'd like to walk you through our rational to divest the Patent Business and explain why we believe this will best serve Unwired Planet stockholders. To begin, the library reported changes in the legal system and [indiscernible] have changed licensee behavior and delayed potential revenue opportunities.
We spent a significant amount of capital litigating various U.S. courts to develop a record of 0 for 28. This was the result of the shifting U.S. environment that at one time protected companies like Unwired Planet who invested billions of dollars in research and development the favoring those who refused to pay licensing fees and install tactics to avoid reasonable settlements from litigation while making litigation as expensive as possible.
The company pivoted to enforcement in the European theatre and even after winning on three out of our four patents in Germany and two out of four patents in the United Kingdom, our licensees our holding out and attempting to exploit the weakness in our balance sheet rather than pay for our intellectual property.
Unfortunately our wins came too late and at too higher price for the company to have a reasonable expectation of building a sustainable licensing business. It became clear our financial resources were too constraint to see the litigations through damages and appeals to what our team believe would ultimately - would be an ultimate victory.
The recent litigation wins in Europe confirmed the potential value inherent in our IT portfolio but also indicated that the amount of cash required to unlock the value through litigation was simply more than the company had. The company's resources are limited and our ability to add debt is severely challenged.
It started to become clear that even if Unwired Planet continue to win in litigation, the company would ultimately run out of money fighting multi-year long court battles and endless appeals. Infringers of judge that is efficient for them to infringe and continue to litigate rather than take licensees on favorable FRAND terms.
It became obvious to us that litigation will let was not in the interest of our stockholders thus leading to our decision to divest the Patent Business. Based on our recent wins we were able to shop the patent estate and receive multiple offers. We approach potential buyers spending financials, strategics and patent aggregators. Ultimately we move forward with the lead better Optis UP lead by Leslie Ware.
In short order we will file a proxy and provide our stockholders to opportunity to vote this divestiture. We target to close this transaction by calendar Q3 2016. The company is now positioned for the future with the cash on its balance sheet, a unique balance sheet and an enhanced Board of Directors.
I’ll let Rich explain our go-forward strategy.
Thanks again, Boris. The process of reinventing Unwired Planet is in underway for a while. We have $1.6 billion of tax attributes that we plan to utilize to enhance the value of attractive acquisition opportunities. In order to build the platform we've had discussions with MAST Capital about participating in the refinancing of our notes as part of securing acquisition currency.
Our Board of Directors has insight and experience in the investment management industry. And with the evolving regulatory environment and current volatility in the markets, we find this to be an attractive vertical. We will however be nimble if we see unique opportunities in other verticals.
Our end goal is to have a portfolio of businesses generating taxable income and recurring free cash flow. We have the ability to be extremely competitive in M&A deals because we are a tax efficient acquirer.
To this end, we participated with MAST Capital on two non-binding term sheets that are currently outstanding with firms in the investment management industry and we hope to have more news for you soon in this regard. We expect to announce our new brand [indiscernible] before mailing our proxy for the divestiture.
Given that this transaction involves assets that are in pending litigation, we need to be careful about statements we make beyond what Boris and I have already shared. As such, we've opted not to take questions on this call. However, we are available for follow-up meetings with interested parties.
With that I'll turn it back over to Lauren.
Thank you everyone for joining us on today's call. We appreciate your time especially at such short notice. Please feel free to reach out to myself or management to schedule calls or meetings. We are happy to speak with anyone. Thank you again.
That does conclude our conference call for today. Thank you all for your participation.
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