Fortress Investment Group (FIG) moved a step closer to taking over the funding of potential enforcement actions involving Inventergy Global's (INVT) 760 telecommunication patents today with another amendment to their existing note agreement.
New York-based Fortress’s IP group, which is headed by Eran Zur, agreed to defer a Sept. 30 amortization payment owed by Inventergy and waive a minimum liquidity requirement until Oct. 30.
Fortress and Campbell, California-based Inventergy said the amended agreement gives them time to conclude discussions in a signed letter of intent that would give Fortress the right to fund an enhanced enforcement program to further monetize Inventergy's 760 telecommunication patent assets.
Shares of Inventergy plunged 14.9% or 28 cents to $1.60. They have traded between 71 cents and $3.90 over the past year.
Inventergy said in a statement that with the letter of intent, Fortress will get 70% of any future revenue generated by monetizing Inventergy’s patents. The companies said the split goes into effect following payments being made to the previous patent holders, payment of any other monetization costs and Fortress collecting approximately $30 million.
"In short, Fortress has switched from being simply a finance partner of Inventergy to a comprehensive business partner. Fortress has agreed to eliminate approximately $21 million in liabilities on Inventergy's balance sheet that stem from an existing agreement between the two firms and deliver $2.2 million for Inventergy to pay-off other debt related to monetizing the patents.
“The partnership is a game changer for this company and shareholders on multiple levels," Inventergy said. "Getting Fortress in Inventergy's corner gives the company the power to aggressively defend its intellectual property, effectively leveling the playing field with larger telecommunications and mobility companies that are widely known for stepping on smaller players that lack the financial muscles to fight to protect patents.
“While the headline benefits of the partnership are obvious, the subliminal message further supports the value of Inventergy IP. It's assumable that Fortress thoroughly vetted the intellectual property and decided that it ought to be of high enough quality to warrant an investment.”
Officials from Fortress couldn't be reached for a comment on how soon it could take over the patents and how much it would invest in an enforcement campaign. Typically, each enforcement action costs up to $3 million when costs of defending against inter partes reviews is taken into account.
Inventergy, run by CEO Joseph Beyers, has struggled to monetize its patents and in the last year or so has focused more on patent asset sales and its new Inventergy Innovations initiative, in which is has completed four partnership agreements and one additional letter of intent, with others expected soon from a pipe-line of more than 10 additional prospects.
The company said significant progress is also being made by the current partnerships with the first results of this effort announced recently.
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