£20m licensing deal to help fund costs of site closure
CARCLO has agreed a license deal that could be worth £20m over the lifespan of the agreement which will help fund the costs of “the likely closure” of its Cambridge facility.
The technical plastics group, based in Ossett, has agreed an initial five-year license with Texas electronics group Unipixel for the fine line technology of its subsidiary, CIT Technology. CIT has also entered into a short-term coated film supply agreement with UniPixel.
Carclo has received a cash payment of £3.13m from Unipixel and will receive an annual payment, which will be the greater of $1.65m (£1.1m) or 1.67% of annual net product sales.
The initial payment will be used to reduce group debt after settling transaction costs and the cash costs relating to “the likely closure of the Cambridge facility”, which are expected to be up to £1.5m.
The fine line technology being licensed uses a process to produce copper flex circuits with sub-five micron feature size. It can, for example, be incorporated into curved touch screen designs.
Unipixel has also been granted a royalty-free intellectual property license to use CIT’s know-how for metal mesh touch screen technology.
The Texas group has been granted an option to extend the licenses beyond the initial five-year term for a further 10-year term in exchange for annual royalty payments of 1.67% of net product sales.
The maximum amount of royalties payable under both the initial and renewal agreements is capped at $30m (£20.2m).
In a statement, Carclo said: “Since commencing its strategic review of the CIT business in October 2014, the board has considered a range of options for CIT. The board believes that the licensing arrangements announced today represent an optimal conclusion to that review and will enable the group to focus on the significant future growth prospects of its two main divisions.”
