Wi-Lan sold TORONTO, June 15, 2023 /PRNewswire/ - Quarterhill Inc. (TSX: QTRH) ("Quarterhill" or the "Company") announced that today it has completed the sale of all of the shares of Wi-LAN Inc. ("WiLAN") to an arm's length purchaser for gross proceeds of up to approximately $71.4 million subject to certain adjustments, including working capital adjustments. As part of the consideration, after this transaction Quarterhill will own 10% of WiLAN and Owlpoint IP Opportunities JVF LP, a joint venture between Arena Investors, LP ("Arena Investors") and Owlpoint Capital Management, LLC ("Owlpoint"), will, directly or indirectly, own the other 90%. No current or prior Quarterhill insiders are investors in WiLAN. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
In addition to the 10% ownership stake in WiLAN, the consideration for this transaction will consist of approximately $48.0 million in cash, approximately $8.0 million as an earn out and approximately $15.4 million pursuant to an unsecured promissory note, which earn out and note are payable on WiLAN achieving certain revenue milestones. Quarterhill's 10% ownership stake can be repurchased by WiLAN for between approximately $13.0 million and $16.0 million subject to WiLAN meeting certain revenue milestones. Quarterhill will be entitled to receive its pro rata portion of any dividend distributions made by WiLAN.
"We are pleased to have completed this transaction, which delivers significant growth capital to Quarterhill's balance sheet and provides an excellent home for this specialized and storied business to prosper as a private company," said John Gillberry, Interim CEO of Quarterhill. "This sale was the logical conclusion of WiLAN's strategic review that started at the beginning of 2022 and enables Quarterhill to now focus exclusively on its exciting Intelligent Transportation System ("ITS") business."
Mr. Gillberry added: "This transaction marks the end of a pivot that began in 2017 and saw Quarterhill transform from a leading patent licensing company to having one of the largest ITS footprints in North America as well as extensive international operations. With two strong platforms in tolling and enforcement, Quarterhill will continue as a stand-alone ITS company seeking to capitalize on the compelling growth rate and tailwinds within the industry today."
Owlpoint focuses on credit investments backed by alternative asset classes, including IP, Film, TV and Music Copyrights, among others. Gustav Brismark, a Senior Advisor to Owlpoint said "WiLAN has a rich history in the business of intellectual property and patents and the experienced management team at WiLAN will be a great partner to Owlpoint, as we move forward and build on that track record."
"Arena is looking forward to working with WiLAN as part of our ongoing relationship with Owlpoint, to leverage WiLAN's IP licensing platform and expand into new technologies and licensing models," said Vivek Nayar, Managing Director at Arena Investors.
Quarterhill was advised by Stout Capital, LLC as Its financial advisor for the WiLAN strategic review process.