AudioCodes to settle IIA debt in royalty buyout agreement

Chicago, Nov. 25 – AudioCodes Ltd. has entered into a royalty buyout agreement with the Israel National Authority for Technology and Innovation (IIA), according to a notice.

AudioCodes and its subsidiary AudioCodes Development Ltd. participated in royalty-bearing research and development programs and had received grants from the IIA. The company paid royalties to IIA at the rate of 1.3% to 5% on sales of products developed with funds provided by the IIA.

AudioCodes' contingent net royalty liability to the IIA at the time of the agreement was about $49 million including interest with different annual interest rates ranging up to 5%.

As part of the royalty buyout agreement, AudioCodes has agreed to pay about $32.2 million to the IIA, to settle the $49 million of debt in full, over three years starting in 2019 in three annual installments.

Upon making the payment, the company will eliminate future royalty obligations and save the associated future interest payments related to the debt.

In 2018, annual royalty expenses to the IIA were about $3 million.

AudioCodes provides voice-over-Internet protocol technologies and voice network products and is based in Lod, Israel.

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