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American Superconductor Corporation Message Board

  • ssquared ssquared Aug 15, 2013 7:17 PM Flag

    Lawyers representing AMSC in Chinese courts and contingency fees

    While I haven't found a comment by management speifically stating that their/our lawyers have to agreed to furture payments on a contingency basis, I have found a comment by Dan McGahn in the June 14 2013 discussion on fouth quarter 2012 results that AMSC (PARAPHRASE) "it's legal costs in China are largely behind them". This may well indicate a contingency agreement and if so, it is huge because the only lawyers on earth who agree to that basis of payment are personal injury in the US. unlsess they are 90% sure of a settlement in excess of the hourly billing fee.

    Sentiment: Strong Buy

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    • According to the last 10k, amsc spent $5,846,000 on the Sinovel litigation in the year ended Mar 31, 2012, and another $691,000 in the year ended mar 31, 2013. In the quarter ended Jun 2013, they spent another $107,000 on Sinovel litigation, according to the most recent 10q. That’s a total for a total of more than $6.6 million.

      The following comments from management (according to SA transcripts) may be of interest:

      CFO David Henry, from the q1 2011 conf call:

      “We expect that our net loss for the second quarter of fiscal 2011 will be less than $38 million or $0.75 per diluted share. I would like to point out that this net loss figure include an estimate of more than $5 million charges related to our litigation with Sinovel. Most of this is tied directly to court fees for our arbitration and civil lawsuits, which are onetime in nature.”

      CEO Dan McGahn q2 2012:

      “As a reminder, the vast majority of the expenses related to our litigation against Sinovel are already behind us. Future legal fees will primarily be on contingency and will be tied to proceeds from either a judgment or a settlement.”

      End quotes.

      My comment: Although amsc’s lawyers would be paid proceeds based on positive outcomes, it seems likely to me they have also been paid substantial sums outright. I.E., the CFO’s comment that MOST litigation costs (totaling now $6.6m) were court fees could mean almost anything. Perhaps $100k’s - or perhaps $millions - paid to lawyers regardless of outcome. We don’t know the specifics.

      Anyway, I’m sure you know from my previous posts that I consider the “contingency fee” thing to be misguided hope for us, the same way all the excitement about KD buying stock in the $30’s because “he must know something” was misguided hope.

      Best of luck.

 
AMSC
1.22Oct 17 4:00 PMEDT

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