(By Balaseshan) Vringo Inc. (NYSEAMEX:VRNG) said it has agreed to buy over 500 patents and patent applications worldwide from Nokia Corp. (NYSE:NOK) for $22 million initial payment.
The portfolio encompasses a broad range of technologies relating to cellular infrastructure, including communication management, data and signal transmission, mobility management, radio resources management and services.
Vringo agreed to compensate Nokia with a cash payment and certain ongoing rights in revenues generated from the patent portfolio. The purchase price for the portfolio is $22 million, plus to the extent that the gross revenue generated by such portfolio exceeds $22 million, a royalty of 35% of such excess.
The $22 million payment shall be paid to Nokia on or before September 14, 2012. The Patent Purchase Agreement provides that Nokia and its affiliates will retain a non-exclusive, worldwide and fully paid-up license to the portfolio for the sole purpose of supplying Nokia's products.
The Patent Purchase Agreement also provides that if Vringo brings a proceeding against Nokia or its affiliates within seven years, Nokia shall have the right to re-acquire the patent portfolio for a nominal amount.
Thirty one of the 124 patent families acquired have been declared essential by Nokia to wireless communications standards. Standards represented in the portfolio are commonly known as 2G, 2.5G, 3G and 4G and related technologies and include GSM, WCDMA, T63, T64, DECT, IETF, LTE, SAE, and OMA.
On Thursday, Vringo entered into Subscription Agreements with several investors with respect to the registered direct offer and sale by the company of an aggregate of 9.6 million shares of its common stock, par value $0.01 per share, at a purchase price of $3.25 per share in a privately negotiated transaction in which no party is acting as an underwriter or placement agent.
The sale of the Shares is expected to settle on or about August 10. The net proceeds to the company are expected to be about $30.5 million after deducting estimated offering expenses payable by the company.
Of the $30.5 million net proceeds from this offering, the company plans to use $22 million as payment to Nokia in connection with the acquisition of patent assets, $3.2 million as repayment in full of the company's outstanding debt to Hudson Bay Master Fund Ltd. and the remainder for general corporate purposes.
VRNG is trading up 0.29% at $3.45 on Thursday, while NOK trades up 4.31% at $2.79.