Friday, June 23, 2017

Court Approval of Stay

The parties move jointly to stay these appeals to pursue mediation and settlement negotiations.
. . .
The motion is granted to the extent that Appeal Nos. 2016-2231, 2017-1838 remain deactivated and Appeal No. 2017-1832 is stayed.  No later than August 3, 2017, the parties are directed to inform this court of the status of the reconsideration motion and how they believe these appeals should proceed.

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1 comment:

nobody123789 said...

An estimate of the value of a settlement per share can be made based on C&C's decision to convert to a 15% contingency fee and rebate the $8,433,388 to KK.

“Next, Cantor Colburn LLP ("Cantor") and the Company entered into an amended agreement pursuant to which Cantor agreed to accept 15% of any recoveries from the Company's pending patent litigation in excess of $3.6 million per year in exchange for all services rendered to date and moving forward. The Company recognized an $8,433,388 gain on extinguishment of debt upon the write-off of all accrued legal fees”.

Add to the $8.43 million a reasonable estimate of the billing fees they would have generated "moving forward". We know from previous older filings that these averaged $50,000/month. We are now 18 months out from the agreement -- therefore add another $900,000 (18 x $50,000). This brings the total to $9,333,388. This is an underestimate as the pace of legal costs would have picked-up considerably during the last several months of negotiations. For convenience estimate the amount that C&C was risking on their decision to take contingency fee over the course of the litigation as $10 million.

A little algebra and we can estimate the amount that the settlement would have to be for C&C to just break even. Assume the settlement is paid out over only two years. Clearly the above anticipates at least that long ("in excess of $3.6 million per year"). Let X be the total settlement then 0.15 x (X - $7.2 million) = $10 million to just break even. X = $114.67 million.

There is always a risk in these proceedings that GERS will get nothing; that risk must be built into the expected settlement to justify gambling with $10 million of C&C's treasury. What level of risk did C&C build into their calculus? I will assume 20%. If that is the case, C&C expected, at a minimum, the settlement to be 1.2 x $114.67 = $137.6 million. I expect C&C envisioned doing more than break-even; estimate the total settlement as $150 million.

KK stated that they needed the R/S to avoid penalties associated with selling stock near Par value -- NOT that the authorized share level (AS) was being approached. A reasonable maximum estimate of the OS count is 20 million, up from the last reported OS count of 14.2 million.

A defensible estimate of the value of the total settlement per share is $150 million/20 million or $7.50/share.

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