Genesis Research is in for a financial windfall as it quits its ArborGen stake.
Biotech company Genesis Research is leaving the joint venture project ArborGen, but will receive at least US$5.5 million ($7.8 million) in an out of court settlement.
The deal is conditional on formal legal documentation being agreed, and approval by Genesis shareholders at its annual meeting on June 17.
ArborGen was
set up in 2000, with International Paper Company, MeadWestvaco and Fletcher Challenge Forests (now Rubicon Forest Industries USA Inc) each owning 31.67 per cent, and Genesis holding just under 5 per cent.
Genesis provided research services and licensed certain technology to ArborGen.
Legal action between Genesis and the other ArborGen partners began in March. The dispute is believed to have centred on the ownership of intellectual property generated by work carried out by ArborGen.
Under the agreement, Genesis will transfer to ArborGen all rights and ownership it has in certain specified agbio technology and patents, including all its forestry related technology.
While Genesis will no longer have ownership rights to ArborGen it will maintain its rights to receive a royalty on certain patented technology used in commercial products that are developed and sold by ArborGen.
On top of the US$5.5 million -- which is due after Genesis transfers certain patents, technology and other material to ArborGen -- Genesis will receive an additional US$1.5 million if ArborGen makes unspecified ownership changes before March 2007.
Genesis said it believed an early settlement of the dispute with ArborGen was preferable to extended court proceedings.
"The board notes that ongoing court action would have a significant impact on management time and would hinder the development of other more productive initiatives for the future benefit of the company," it said in a statement.
ArborGen is working on radiata pine, eucalypt and loblolly pine, looking at developing faster growing trees which are easier to pulp.
- NZPA
