$56 million payout may be fought by Unwired

An acrimonious legal fight over the $37.5 million investment made by Intel marks the end of the four-year relationship between Unwired and the chipmakers, who were its primary WiMax backer.

An order to pay the money back with interest has been issued by the NWS Federal Court against the wireless internet service provider, although the chipmakers demand for a further $18.5 million is something that Unwired is decider whether or not to continue fighting against.

David Havyatt, the regulatory and corporate affairs manager for Unwires said that the battle in the court should not be used as an indication of either the plans for the wireless ISP to deploy its services in national capitals or the confidence Intel has in WiMax technology.

He said that although the claims made by the chipmaker for an extra $18.5 million were being disputed the main sum to be paid to Intel had already been factored in Unwired’s business plan.

Commercial disagreements between Intel and Seven Group over the long-awaited rollout of Unwired’s national WiMax network had led to the legal dispute, said Mr Havyatt, although when asked if the company were continuing to pursue the matter he refused to comment. Mr Havyatt said “That’s part of our legal strategy and you don’t flag that sort of thing until you actually tell the court.”

A low-cost but complex credit facility that was secured from Intel Capital by Unwired in August 2005 is part of the legal battle. When Unwired took the facility Intel agreed that in return for certain guarantees it would take $37.5 million worth of convertible notes in the ISP.

As part of its agreement Unwired agreed to provide Intel with a platform that would allow it market test equipment and WiMax chips that is was developing by building a national WiMax network.

If Unwired were to change hands or if it were unable to build the broadband network, Intel had secured as part of the agreement  that Unwired would be required to pay an additional redemption premium payment of $18.5 million on top of value of the original investment, with interest.