From the Toronto StarMar. 24, 2006. 08:26 AM
CALGARY (CP) — Wi-Lan Inc. (TSX: WIN) has struck a deal to acquire Ensemble Communications Inc. and settled a royalty dispute with Ottawa in moves to restructure the company to focus on its wireless technology patents.
The Calgary-based telecom technology company said Friday that its newly created patent licensing subsidiary, Wi-Lan Technologies Corp., has bought substantially all the assets of Ensemble Communications, based in La Jolla, Calif.
The move allows Wi-Lan to buy back its patent portfolio and relieves the company of a large royalty commitment.
Under terms of the deal, Wi-Lan will buy back the patent purchase and royalty commitment deal between the two companies negotiated in 2004, which provided the Canadian company with its current WiMax MAC wireless patents.
As part of the prior deal, Ensemble acquired licensing rights to the Wi-Lan patent portfolio as well as significant revenue sharing on any licenses Wi-Lan sold in the future.
Friday's announcement relieves Wi-Lan of these commitments. The Calgary company also gets inventors' files, drawings and notes for other technology Ensemble was working on prior to its windup in 2004, as well as a licence to a number of additional patents that are complementary to Wi-Lan's current portfolio.
In return, Ensemble will receive two million Wi-Lan common shares, worth about $1.1 million at the Calgary company's current stock price of 56 cents.
The deal is slated to close by the end of the month.
"As Wi-Lan continues to aggressively change its business plan to leverage its core assets, the removal of a licence to our patent portfolio and the removal of revenue sharing provisions to Ensemble sets the stage for Wi-Lan's licensing initiatives, which are already formalized and well underway," Bill Dunbar, president and CEO of Wi-Lan Inc., said before stock markets opened.
"Wi-Lan Technologies Corp. is the vehicle that will be negotiating licenses with companies in many markets this year that utilize Wi-Lan's many patented technologies including its fundamental US and Canadian patents in OFDM technology, and its global WiMax MAC patents."
In another development Friday, Wi-Lan said it has completed a settlement with Industry Canada that will require the company to pay $1.8 million by the end of April to settle obligations under the federal Technology Partnerships program.
The settlement was prompted by Wi-Lan's default on the agreement and the company's recent plans to restructure its business.
Under a prior agreement, Technology Partnerships financed $5.5 million of the $18.8 million Wi-Lan spent on research and development of new products. In return, Wi-Lan was required to issue $5 million in common share warrants to the government and to pay royalties on product sales up to a maximum of $12.2 million.
With the cash settlement, Wi-Lan said it has relieved itself of these and any further obligations to the government.
"This settlement allows Wi-Lan to proceed with and conclude a number of agreements that have been recently announced," said Dunbar. "We believe the settlement is fair for both parties, and positions Wi-Lan to complete the sale of its non core assets."
Wi-Lan announced plans to exit its wireless products business Feb. 1 following a review and assessment of strategic alternatives. Earlier this week, the company struck a deal to sell its IP division to Fujitsu Microelectronics America Inc.
08:17ET 24-03-06
Cryton