I've been following this closely. Firstly the IP associated with the 4th gen chip and Nuheara's software is highly valuable. Now that Apple have added hearing amplification to their traditional retail phones and bud, there is an entire spectrum of android phones and buds needing to compete with that additional feature. Nuheara could forget about making earbuds and just licence the chip/software.
For those who think Realtek was out to destroy Nuheara and take the IP, it was Miller who took this company down a dead end where there was no market for his product. Realtek had enabled Nuheara to remain as a going concern by heavy participation in CRs and then by the CN loan of $2.5M. Miller instigated suspension from trading by not submitting the 2023-2024, 1/2 yearly report. Throughout 2024 while management were advised on strategy by KPMG, Realtek sat back and did not call in the $2.5M loan. Even while under attack in this VA, Realtek were still asking for only 50% of the IP etc.
When VA commenced in August 2024, I believed it could have been sorted out during the normal five weeks of business day period by a conventional DOCA. KPMG's VA fee was set at $300,000. That DOCA would have involved assignment of a proportion of retail shares to Realtek to cover the $2.5M and interest. For example a minimum offer, at sp 8c, about 10% of holdings or 31M shares could have been transferred to Realtek bring them up to 20% total. Creditors could have been settled by a similar process. The end result would be the company relisting, seeking capital by subscription and or initiating deals for the 4th gen chip. The DOCA would have included giving Realtek 50% of IP etc as part of an agreement for production and supply. Bargaining could have extended to giving Realtek up to a 51% holding in order to guarantee success with such a DOCA..
Instead we had a strategy by Miller/share holders committee/KPMG first to attempt to de ratify Realtek's priority creditor status. This was denied by the Federal Court. Extension of the period of VA was funded by the shareholders committee to the present such that KPMG's fee is over $3M. In the first DOCA, earlier this year, KPMG arranged a head count vote in which Realtek, although a priority creditor, was placed alongside ordinary creditors given the same voting power. How did Realtek lawyers allow this to occur? The last court hearing basically stipulated that the result of the second DOCA meeting should determine the outcome. Realtek put in a better deal than for the second DOCA vote which also went the KPMG/shareholders way. Miller, the chairperson and other Nuheara members were on the creditor list and would have voted against Realtek. Who knows who the remaining creditors were and what influences may have been brought to bear on them. They nevertheless voted against a better financial offer.
The first DOCA outline made no mention of shareholder outcome until I found, in the fine print, that paragraph stating all shares other than their own were to be assigned to the shareholders committee. That was confirmed by Bohan Teakle.The process is that the company has now been sold to Orecchio (meaning ear in Italian), a $2 company registered in February this year by two members of the shareholders committee. In order to fund all of this I suspect that the shareholders committee has had a buyer or other deal in waiting, beyond Orecchio. If such a deal exits, why was it not managed through Nuheara in the first place?
Some may have initially thought that the shareholders committee was a "white knight" representing the interests of all shareholders. So far it looks like a self interested group who have strategised with KPMG in order to wrest Nuheara both from Realtek and other shareholders. At this stage there remains no outlook for ordinary shareholders. I remain dismayed that Realtek lawyers have let this go through to the keeper. There was clear bias by KPMG in favour of the shareholders committee which could have been grounds for dismissal of the administrator and appointment of an independent administrator. The head count DOCAs should not have eventuated, given Realtek's priority credit rating. I suspect Realtek will challenge the outcome, but as you comment, neither parties' DOCAs held anything for ordinary shareholders. This brings me back to the disappointment that shareholders could have been looked after in a conventional DOCA if proposed at the outset
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