march 2nd release
OPEL Announces Third Party Valuation of its POET Technology
3/2/2011 10:24:17 AM - Market Wire
Third Party Valuation of POET Technology over $1 Billion
SHELTON, CONNECTICUT, Mar 02, 2011 (MARKETWIRE via COMTEX News Network) --
OPEL Solar International Inc. ("OPEL" or "the Company") (TSX VENTURE: OPL) announced today that it is in receipt of a third party valuation of intellectual property developed by its U.S. affiliates OPEL, Inc. and ODIS Inc. The Planar Opto Electronic Technology ("POET"), initially developed by Dr. Geoffrey Taylor at the University of Connecticut and licensed to OPEL, Inc., is a semiconductor fabrication technology that enables the dense packing of digital, analog, and optical circuits on a single gallium arsenide chip. The technology now makes it possible to monolithically integrate a wide number of electronic and optoelectronic functions in a single chip with higher speeds and reduced power consumption compared to Silicon CMOS. For the same functionality, the chip size would be considerably reduced to approximately the size of half a person's thumb nail.
OPEL commissioned a valuation analysis of the POET Technology portfolio ("POET Technology") by an independent, third party valuation firm, Pellegrino & Associates, LLC. The Pellegrino firm performed an analysis of the uses of the POET Technology, the sales it could achieve in its targeted end-markets and likely margins if OPEL can complete its research and development activities successfully and the market adopts the POET Technology. Using a number of valuation techniques and based on technical information provided to it by the Company, the valuation firm has estimated that the POET Technology portfolio could be worth as much as approximately $1 billion. This worth is derived from a range of values; the median value being $966.6 million, while the mean valuation was reported at $1.31 billion.
Using the income approach to value, Pellegrino & Associates, LLC built a valuation model to determine the economic income that might be possible from the potential exploitation of the POET Technology in several prospective markets. Pellegrino & Associates, LLC used market data, revenue projections, investment data, and cost data as from various sources, including from ODIS representatives, to determine the economic income attributable solely to the POET Technology. Pellegrino & Associates, LLC then integrated the information into a valuation model, accounting for the economic life of the POET Technology. Pellegrino & Associates, LLC performed a royalty rate analysis to determine what the market may bear as a reasonable royalty rate for the exclusive use of the POET Technology. Pellegrino & Associates, LLC developed a risk-adjusted discount rate to discount forecast future free cash flows to determine a nominal value indication as of the appraisal's effective date.
To account for the uncertainty inherent in the valuation process, Pellegrino & Associates, LLC captured the complex model interactions in the face of uncertain estimating assumptions using Monte Carlo simulation techniques. This did not constrain the valuation model to any single value predictions of key values such as royalty rates or costs. Pellegrino & Associates, LLC programmed the valuation model to recalculate repeatedly to create a distribution of outcomes that Pellegrino & Associates, LLC analyzed. Pellegrino & Associates, LLC used the range of values calculated by the model to come to a final determination. In complex situations that involve uncertainty, this methodology helps to generate meaningful estimates that would otherwise be impossible to model using discrete methods such as best-, expected-, and worst-case modeling. Pellegrino & Associates, LLC used the median value from this simulation process as the fair market value for the POET Technology. The Company will post a copy of a redacted version of the valuation on its website at www.opelinc.com, as well as on SEDAR at www.sedar.com, concurrent with the dissemination of this press release. Disclosure of certain information in the valuation would be seriously prejudicial to the interests of the Company and its shareholders, or would violate confidentiality provisions with third parties, and has been omitted or marked to be unreadable. The redactions have been done by the Company and Pellegrino & Associates, LLC. The omitted information is that information necessary to protect important proprietary and technical information of the Company and third parties, including Pellegrino & Associates, LLC, and to protect against competitor infringement. Canadian Securities Administrators National Instrument 52-103 provides that a reporting issuer that discloses material forward-looking material information must include disclosure that states the material factors or assumptions used to develop forward-looking information. As a consequence of the redactions, Pellegrino & Associates, LLC has provided a detailed memorandum which sets out the key assumptions they used in the construction of their valuation models. The memorandum is attached as a schedule to this press release and should be read in conjunction with the redacted valuation which contains important information concerning the methodology of the valuation and the credentials of Pellegrino & Associates, LLC.
It is important to note that a third party valuation is not an indication of interest by any party, nor does it represent an actual offer to purchase the POET intellectual property. As indicated in the report, the POET Technology is still under development, and no assurances can be given that such development will be successfully completed, that the technology will be brought to commercial realization or that the Company's target markets will adopt this technology. Commercial applications of the technology will likely not be available for several years, if ever.
The fair market value estimate in the appraisal report does not necessarily reflect the actual price that OPEL could realize from a true sale of its technology in a real market. Rather, the valuation reflects the notional value of the technology in an assumed market. This assumed market considers, among other things, the historic and prospective value of the technology in light of the associated business risk. The notional value does not include possible synergistic benefits or economies of scale that might accrue to the potential purchaser not already captured in the report. The notional value was also derived utilizing various assumptions and estimates relating to growth, establishing new markets, expansion into new markets and related plans other than statements of historical fact, which are forward-looking statements subject to a number of uncertainties that could cause actual value to differ materially from the third party valuation. Pellegrino & Associates makes no representations or assurances as to the Company's plans or ability to effect any planned and/or proposed actions. Furthermore, Pellegrino & Associates derived its valuation based on certain technical information provided by the Company and related sources believed by the valuation firm to be reliable, but the valuation firm did not undertake an independent verification of the accuracy and completeness of this information, and no representation, expressed or implied, is made as to its accuracy, completeness or correctness. Pellegrino & Associates is not an investment advisor, and its report is not investment advice.
In the real market, the technology could generate as many prices as there are buyers in the market, with each buyer having the ability to pay its own specific price based on its own specific set of circumstances. In the end, the final price will be the result of a set of negotiations between buyers and sellers that the valuation firm could not ascertain or forecast for the purpose of its engagement. However, Pellegrino & Associates did test its value conclusions to ensure that there was a reasonable economic basis for its value opinion.
Pellegrino & Associates prepared its report in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP") adopted by the Appraisal Standards Board of the Appraisal Foundation, and the Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers. OPEL paid Pellegrino & Associates a flat fee for its analysis that was in no way contingent on achieving any predetermined value conclusion. Further, Pellegrino & Associates has no current or contingent interest in OPEL and has no duty to update its analysis to account for subsequent events.
The Board of Directors of OPEL engaged Pellegrino & Associate in order to assess the potential for the POET Technology and is considering alternatives to realize the full value of the POET Technology. On February 28, 2011, the Board of Directors passed all of the necessary resolutions to authorize the sale of the POET intellectual property portfolio. Currently, the Board of Directors is evaluating proposals from investment banking firms specializing in this technology regarding an engagement to consider strategic alternatives for OPEL's future exploitation of the POET Technology, which may include the full or partial sale of the technology.
OPEL will host a conference call to discuss the valuation, strategic alternatives and the POET Technology. The call will occur on Friday, March 4, at 11:00 AM Eastern Standard Time. Interested parties can participate by calling 1-888-510-1765, which is toll free in Canada and the U.S. (Other International callers can dial 1- 719-457-2624, which is not toll free.) The call will also be webcast, and can be accessed at https://viavid.net/dce.aspx?sid=00008205. A replay of the call will be available on the OPEL website, in the Investor Relations section, for one year after the call.
Leon M. Pierhal, Chief Executive Officer of OPEL, elaborates, "We are extremely proud and excited about the work we are doing on the POET Technology. We control a revolutionary technology that we think can fundamentally alter the landscape of the server, smart-device and computing industries. Never before has one chip been able to integrate both electronic and optical circuits. By combining them in one part, we believe we can eliminate the inefficiency and cost burden on systems that must use separate chips for each function. These cost savings and performance improvements can be immense, potentially transforming the whole industry."
Background on POET Technology
Known as the Planar Opto Electronic Technology ("POET"), POET fulfills a long-held objective of the semiconductor industry, bypassing many of the physical limits of existing semiconductor technologies. Key benefits of the POET platform include faster semiconductor operating frequencies-- up to 100GHz-- lower heat losses, greater reliability, and total system cost. All components of the technology have been validated by third parties, and the Company expects to have a fully integrated, operational chip within months. The technology is protected by numerous U.S. and international patents issued and pending.
ODIS personnel are working with leading defense systems integrator companies and with military and government agencies to develop important applications for the technology. With partners, ODIS is developing infrared arrays for imaging, optoelectronic switches, compact ultra-low power memory, optical CDMA communications chips, and radio frequency detection arrays. The Company believes that POET has numerous applications in computing and communications technologies, and it will fundamentally alter the landscape of those industries with heretofore unattainable functionality and price/performance.
About OPEL Solar International Inc., OPEL, Inc. and ODIS Inc.
With operations headquartered in Shelton, CT and the head office in Toronto, Ontario, Canada, the Company, through OPEL, Inc., designs, manufactures and markets high performance concentrating photovoltaic ("HCPV") panels to transform solar energy into electricity for worldwide application. OPEL's high performance photovoltaic concentrating panels generate up to 40% more kilowatt-hours than conventional flat plate silicon solar panels, resulting in more cost effective electricity generated from the sun. OPEL also markets a complete line of dual and single axis solar trackers to mount either HCPV or flat solar panels for the optimum power output. The Company, through ODIS Inc., a U.S. company, designs infrared sensor type products for military, consumer, industrial and commercial applications. ODIS continues to develop gallium arsenide-based processes and semiconductor microchip products having several potential major market applications: infrared sensor arrays for Homeland Security monitoring and imaging along with the unique combination of optical lasers, and electronic control circuits on the same microchip for potential applications in various military programs and potentially telecom for, Fiber to The Home.
A leader in gallium arsenide and solar concentrating photovoltaic technology, the Company has been awarded 33 patents and has 17 more patents pending, including those related to POET. OPEL's common shares trade on the TSX Venture Exchange under the symbol "OPL". For more information about OPEL, please visit the Company's website at www.opelinc.com.
Dated: March 2, 2011
ON BEHALF OF THE BOARD OF DIRECTORS
(Signed)
Michel Lafrance, Secretary