Inventergy Global Inc. (INVT), the patent monetization company run by Joe Beyers, said it has reached an agreement with Fortress Investment Group LLC to provide up to $3 million in advances on an $11 million debt facility based on future payments from Inventergy IP licensees.
Campbell, Calif.-based Inventergy also said Fortress agreed to waive or adjust certain prior debt repayment terms for near-term licensing agreements made by Inventergy.
The move comes a week after Inventergy announced $2 million in revenue from licensing agreements with a mid-tier telecommunications technology company providing IP Multimedia Subsystems (IMS) solutions. The licensee was was not disclosed. Inventergy officials said the identity of the licensee was confidential.
Inventergy is the second patent monetization company to amend a debt financing deal with New York-based Fortress. Last week Netlist announced changes to its $15 million debt financing from Fortress that the patent monetizer said would accelerate the release of the funds to Netlist and place a cap on the share of royalties to which Fortress was entitled.
Inventergy and Netlist are among a group of publicly traded patent monetization companies to get debt financing from Fortress over the past two years. The others are Andrea Electronics (ANDR), Crossroads Systems (CRSD), Document Security Systems (DSS), Marathon Patent Group (MARA) and SITO Mobile Ltd. (SITO).
Beyers couldn’t be reached immediately for comment.
In a statement, Beyers called Fortress “a valuable financing partner” that “continues to demonstrate confidence in our business model, superior assets and licensing program.”
"This future payment advance agreement with Fortress, among other things, enables Inventergy to establish flexible payment terms with licensees, further improving total licensing payment opportunities, while providing Inventergy additional operational cash resources to further drive key licensing initiatives,” he said.
"We are extremely pleased to have a company like Fortress backing us in our licensing efforts.”
In a filing with the Securities and Exchange Commission, Inventergy said Fortress agreed to loan Inventergy an additional $3 million between Feb. 25 and Dec. 31, 2015.
The additional available credit would be drawn down in the form of senior secured notes based on revenue Inventergy generates from certain near-term existing and future license agreements.
Inventergy on Feb. 25 drew down $1,199,500 from the additional available credit and issued additional notes in that principal amount to Fortress.
In connection with the issuance of the additional available credit, Inventergy issued 500,000 warrants to purchase shares of its common stock to Fortress.
After the payment of all purchaser-related fees and expenses relating to such issuances, Inventergy received net proceeds of $1,172,885. The company said it will use these net proceeds for general working capital purposes.
Inventergy said under the amended agreement with Fortress the structuring fee equal to 3.5% of the original principal amount of any such additional notes was waived.
The new additional notes will be repaid from the future licensing payments on the draw down licenses received from those specific draw down licensee or licensees, while the requirements otherwise to pay 86% of the monetization net revenue toward the original notes for the upfront payment of the initial draw down license and the remaining future payments of draw down licenses were waived.
Fortress is entitled to receive $7.7 million plus 70% of the additional notes as a portion of the revenue stream basis if the notes and revenue stream payments are paid in full by the maturity date and $9.35 million plus 85% of the additional notes as a portion of the revenue stream basis if the notes and revenue stream payments are not paid in full by the maturity date.
The revenue stream payments will begin after all obligations on the notes are paid in full.
Inventergy is required to apply specified decreasing percentages (46% to 31% to 6%) of its net revenue (net of monetization costs) from monetizing its intellectual property assets on an ongoing basis to meet the revenue stream payment obligations.
Payment of the full revenue stream payments in addition to the note obligations by the maturity date would ordinarily occur after Inventergy receives about $60 million in gross licensing revenues, assuming an average monetization cost of 33%.
Inventergy also will not be required to apply the initial installment payment under the first draw down license to its note obligations or the revenue stream under the amended agreement.
The agreement also contemplates the issuance of up to an additional $2 million in notes beyond the additional available credit.
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