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What it also shows is how much short term share price movements are beholden to the investment strategies of the big investors.
If Lombard had decided not to sell anything we'd be looking at a much higher share price now, possibly above 70p.
I'm relieved Lombard are selling. It goes a long way to explaining why the share price is so low, and I would be surprised if we don't see another RNS tomorrow for further selling yesterday.
I think the best explanation for their selling is profit taking/de-risking. The fact they sold on Friday when we had no details on the settlement strongly supports this, unless you believe they had inside info which I think is fanciful.
I believe Henry Turcan left the board so that they were free to sell at any point they wanted. Ahead of trial/settlement they knew they were entering a period where as a director he and therefore Lombard could have received a lot of inside info. Liquidity is absolutely essential to funds so better that he stepped down.
Some of the posts on here are becoming hysterical and are being fuelled by the following misconceptions:
1. We've accepted a low ball offer.
All we know is that the settlement is at the lower end of the range, but the higher end was only going to happen if we went through the whole appeal process and the middle if we won and had a Germany/China injunction. It's unclear what the figure is but it could still be a huge number.
2. We won't be compensated for non-US sales and future royalties.
Samsung prefer to incorporate other historic sales and estimated future royalties into one lump sum. I imagine the future royalties is where there will be the fiercest negotiations. But the final figure could be very sizeable. I do admit that this possibility should have been communicated better by the board, although they did actually mention it in presentations.
3. We haven't got "fair value" as BT always insisted upon.
In the recent webinar, BT suggested c. 1% royalty as fair value. I don't think that's far off the "lower end of the range".
4. The litigation funder is pulling the strings.
Absolute nonsense, as anyone with knowledge of litigation funding knows.
5. We could end up with nothing.
No words necessary.
Flying higher, are you losing your mind? When Edison say the following:
"IF THE COMPANY RETAINS ANY of the final settlement money, this will likely be to de-risk the cash runway (currently until CY25) and allay going-concern fears"
...what they're saying is if they decide not to distribute it to shareholders or do a buyback. It's not about Nanoco not getting anything.
Please, Edison are not suggesting the final settlement will be $200m, that figure relates only to US historic sales.
Here's a basic sum of what the parties might negotiate:
- $100m for US historic sales
- $100m for rest of world historic sales
- $200m for future global sales.
If this were accurate we'd get $400m. And I'd say these amounts are attainable, if not quite conservative.
I also wonder whether the final bullet point of three in the RNS, dealing with the no future royalty payment, is actually the company saying "we accepted a low range value for the US litigation, but we may actually end up getting a pretty sizeable final agreement sum because it's going to include all future and historic sales globally."
I don't want to be guilty of wishful thinking, but it would kind of make sense.
If there is some kind of adjudication maybe Samsung don't want that detail to be made public for other patent litigators, so it's described as negotiations. Or maybe it's some kind of hybrid adjudication/negotiation.
It's the fact that the process isn't fully within the parties control which makes me think this. Why else would that be? Surely they could agree a final figure tomorrow and have the case dismissed if they wanted to.
I wonder if the parties have agreed to an adjudication process over the next 30 days to sort out the final agreement.
Adjudication is a process where the parties agree to be bound by the decision of an independent adjudicator, often a judge, who will swiftly resolve any dispute and issue a damages amount. It is often completed within a month, and in this case would involve a lump sum representing non-US historic sales and all future sales. This may be why the RNS refers to the process still being within the US court process and the timing being outside their control. I'm struggling to see why else the RNS may have said that.
It might also explain why the RNS suggests the value of the final agreement is also outside their control.
I know that adjudication is common in the UK, not so sure about the US. But it would make sense for the parties to use that process here - let an independent person decide within the 30 days.
I agree, the market has been spooked by "lower end range" and "no forward royalties" and questioned whether we're going to get a big payday after all.
The whole RNS is guarded, but I think it really has to be. If the final agreement remains to be negotiated then it is impossible to give any guidance on what the final amount will be.
Regarding the one-off payment, it's terrible that this hasn't been considered to date, but it actually makes complete sense, since Samsung are likely to incorporate the QD into future products, and how do you set a royalty rate for products not yet in existence? Much better to agree a lump sum which hopefully takes into account the likely royalties Nanoco would have received over the full life of the patents.
Also, both the CEO and BT's are positive given the circumstances. BT can hardly say "the final agreement will be transformational" when he doesn't know what it will be, but he says he's never been more confident. That's not bad.
When I read the RNS my heart sunk - my interpretation was that we'd end up with about £50m after all fees for everything.
However, rereading the RNS I think I confused the US *historic* settlement ("gross settlement value") with all historic and future sales. Although it's not particularly clear, I believe the two are separate. Having re-read the RNS fifty times I think there will be one final agreement combining two separate agreements:
1. The US settlement agreement, dealing with US historic sales.
2. The final agreement, incorporating non-US historic sales and global future sales.
The two potential pieces of "bad news":
1. The "gross settlement value" will be towards the lower end of guidance. Did anyone actually expect anything different for a pre-trial settlement?
2. There will be no royalties but a one-off payment. Assuming the one-off payment takes into account likely future sales (not sure why it wouldn't) why does it matter if we receive a one-off payment instead?
Criticism of this viewpoint welcomed - have I missed anything?
When BT says the "gross settlement value" will be towards the lower end of the range, does that "gross settlement value" include all other jurisdictions and future sales, or is it just the element of the final agreement that makes up historical sales? It's not very clear.
Blitzed, what I would say is that history is full of examples of minnows who on the eve of going to trial against behemoths feel compelled to accept settlements worth many times more than their historic earnings but which is much less than what they were suing for. Does Nanoco fall into that category? I don't think so. But it's not completely surprising the market is pricing in a settlement of c. $100m.
Sorry, if Samsung sells screens to Sony then we will surely get further royalties from that?
This is actually an important point: how many QD TVs do other companies like Sony sell who get their screens from Samsung?
I thought I would give my thoughts on the likely timing of the agreed settlement, looking at this from an M&A perspective. In short, I would expect the agreed settlement to come later rather than sooner, and for there possibly to be an extension to the 30 day deadline.
At the moment, the parties have agreed non-binding heads of terms and have a 30 day deadline in which to finalise the agreement. A similar thing often happens in M&A deals, often in auction processes (typical when a PE fund is selling) when a preferred bidder is given an exclusivity period of e.g. 45 days in which to carry out further due diligence and agree the share purchase agreement and other docs.
From experience, it is rare for such deals to get agreed comfortably in advance of the deadline. I think it's just a feature of how they operate and how much the lawyers dispute the finer points. Two weeks before the deadline the lawyers will argue over insignificant things, but the day before they move into pragmatic mode. That's lawyers being lawyers.
It's not uncommon for the buyer to require more time and to that end request an extension to the deadline. This can vary in length but is typically not a great deal longer than the original window. It's rare for the seller to say no, unless it wants to pull out of the deal or sell to someone else.
At this point I should say I have no experience of patent settlements and don't know what points they might need to finalise. That said, going off my corporate experience I would expect the final agreement to be announced near the deadline, and I wouldn't rule out the possibility of a deadline extension of e.g. 2 weeks.
However, I would be extremely surprised if Samsung tried to pull out of the settlement, that simply doesn't make sense. So if we run near to the deadline or if there is an extension, I would recommend keeping calm and not getting jittery.
I hold just over 1 million, although sadly at an average of slightly over 40p (only found Nanoco 7 months ago). That said, if we get a good deal it will set me and my family up for life.