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.
About Quarterhill
Quarterhill is a leading provider of
tolling and enforcement solutions in the Intelligent Transportation
System (ITS) industry. Our goal is global leadership in ITS, via
organic growth of the Electronic Transaction Consultants, LLC (ETC)
and International Road Dynamics, Inc. (IRD) platforms, and by
continuing an acquisition-oriented investment strategy that
capitalizes on attractive growth opportunities within ITS and its
adjacent markets. Quarterhill is listed on the TSX under the symbol
QTRH and on the OTCQX Best Market under the symbol QTRHF. For more
information: www.quarterhill.com
About Arena Investors, LP
Arena Investors is an
institutional asset manager founded in partnership with The Westaim
Corporation (TSXV: WED). With $3.5
billion of invested and committed assets under management as
of December 31, 2022, and a team of
over 100 employees in offices globally, Arena provides creative
solutions for those seeking capital in special situations. The firm
brings individuals with decades of experience, a track record of
comfort with complexity, the ability to deliver within time
constraints, and the flexibility to engage in transactions that
cannot be addressed by banks and other conventional financial
institutions. Please visit www.arenaco.com for more
information.
Forward-looking Information
This news release contains
forward-looking statements regarding Quarterhill, its operating
subsidiaries and their respective businesses, including statements
about the future payment of any earn out or promissory note in
connection with the transaction, future achievement by New WiLAN of
the prescribed revenue milestones, any repurchase of Quarterhill's
shares in New WiLAN, any payment by New WiLAN of dividends to
Quarterhill, Quarterhill's future success without WiLAN, and
expectations regarding New WiLAN's future business model and
structure. Forward-looking statements are based on estimates and
assumptions made by Quarterhill in light of its experience and its
perception of historical trends, current conditions, expected
future developments and the expected effects of new business
strategies, as well as other factors that Quarterhill believes are
appropriate in the circumstances. The forward-looking events and
circumstances discussed herein may not occur and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting Quarterhill, include, without limitation,
the risks described in Quarterhill's March
22, 2023 annual information form for the year ended
December 31, 2022 (the "AIF"). Copies
of the AIF may be obtained at www.sedar.com. Quarterhill recommends
that readers review and consider all of these risk factors and
notes that readers should not place undue reliance on any of
Quarterhill's forward-looking statements. Quarterhill has no
intention, and undertakes no obligation, to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
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SOURCE Quarterhill Inc.