REG - Ethernity Networks - Fundraising & update re. creditor settlement plan

Ethernity NetworksAnnouncement

Yesterday 07:00

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RNS Number : 9356G  Ethernity Networks Ltd  01 May 2025

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the Market
Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN, INTO OR FROM, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE
UNLAWFUL.

 

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO BUY, ACQUIRE OR SUBSCRIBE
FOR (OR THE SOLICITATION OF AN OFFER TO BUY, ACQUIRE OR SUBSCRIBE FOR)
ORDINARY SHARES TO ANY PERSON WITH A REGISTERED ADDRESS IN, LOCATED IN, OR WHO
IS A RESIDENT OF, THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR
THE REPUBLIC OF SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL OR CONTRAVENE ANY REGISTRATION OR
QUALIFICATION REQUIREMENTS UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

 

1 May 2025

ETHERNITY NETWORKS LIMITED

("Ethernity" or the "Company")

 

Placing, Subscription and full repayment of creditor settlement plan

 

Ethernity Networks Limited (AIM: ENET.L) (OTCMKTS: ENETF), a leading supplier
of data processing and PON semiconductor technology for networking appliances,
is pleased to announce a fundraise to raise £800,000 (approximately US$1.06
million), before expenses, through the issue of 3,636,363,633 new ordinary
shares of NIS 0.001 each ("Ordinary Shares") at an issue price of 0.022 pence
per new ordinary share (the "Issue Price") (the "Fundraise"). The Placing is
being undertaken by Peterhouse Capital Limited ("Peterhouse") and CMC Markets
("CMC") acting as Joint Bookrunners.

 

Highlights

 

·   Placing to raise gross proceeds of approximately £719,000 before
expenses through the issue of 3,268,181,726 new Ordinary Shares ("Placing
Shares") at the Issue Price (the "Placing").

 

·    David Levi, Yosi Albagli and certain other investors have subscribed
for an aggregate of 368,181,907 new Ordinary Shares ("Subscription Shares") at
the Issue Price to raise gross proceeds of approximately £81,000 before
expenses ("Subscription").

 

·    Participants of the Fundraise will receive one warrant for every
Subscription Share and Placing Share (together, the "Fundraise Shares")
subscribed for, exercisable at the Issue Price (the "Warrants") for 12 months
from Admission, with an acceleration clause triggered at a share price of
0.045 pence.

 

·    The Fundraise proceeds will enable full settlement of the creditor
repayment plan to enhance the Company's credibility and to be positioned more
favorably for strategic growth initiatives, including the ASIC development and
targeted long-term partnerships as detailed in the Company's 23 April 2025
trading update ("2024 Trading Update").

 

·    Ongoing discussions with the four wireless vendors as the Company
pursues its strategic objective to become a semiconductor company, including
promising progress with one of the wireless vendors.

 

·    Admission of the Placing Shares and Subscription Shares is expected
to occur at 8.00 a.m. on or around 7 May 2025.

 

David Levi, Chief Executive Officer, commented: "In October 2023, the Company
entered into a Temporary Suspension of Proceedings ("TSP") process, where I
provided a loan of c. $250,000 to the Company to allow the Company to continue
its operations, and during this three month period we succeeded to close two
contracts that generated cash of $1.3 million, such that together with
on-going revenue and a fund raise of $880,000, the Company closed FY2023 with
cash of c. $2 million. That enabled the Company to exit the TSP and provided
an opportunity to enable a recovery in the Company's operations.

 

"With all the constraints of being a company operating under a creditor
arrangement, we continued to invest millions of dollars in R&D during 2024
to expand on our product development offering and succeeded in gaining
interest in our UEP-2025 product from leading and Tier-1 telecom OEM vendors,
that invested months in testing our product, as detailed in our 2024 Trading
Update.

 

"Exiting the creditor settlement arrangement will be a milestone for the
Company as it is a critical step towards strengthening the Company's financial
position, restoring supplier and partner confidence, and improving overall
operational flexibility.

 

"Based on our ongoing discussions with the four wireless vendors, and given
the strong level of engagement and interest, I believe that, subject to
securing continued funding support, the Company will be well-positioned to
successfully transform its business operations and execute its strategic plan
to become a semiconductor company."

 

Background to, reasons for the Fundraise and use of proceeds

 

The net proceeds from the Fundraise will be used to settle the outstanding
payment obligations due under the creditor settlement plan and to support the
continued development and advancement of the Company's ASIC business as set
out in the 2024 Trading Update.

 

Resolving Ethernity's status as a company that operates under a creditor
settlement arrangement is a critical step towards strengthening the Company's
financial position, restoring supplier and partner confidence, and improving
overall operational flexibility.

 

Clearing this issue will not only enhance the Company's credibility in the
market but also position it more favorably for strategic growth initiatives,
including the ASIC development and long-term partnerships as detailed in the
2024 Trading Update.

 

Additionally, the ASIC plan - now expanded to include support for Passive
Optical Network ("PON") functionality - will further strengthen the Company's
ability to re-engage with OEMs that previously evaluated our FPGA-based UEP
solutions. With the availability of the ASIC, these OEMs would be able to
access groundbreaking, high-performance appliances, significantly enhancing
their own market offerings.

 

Details of the Fundraise

 

The Company has conditionally raised a total of £800,000 via the issue of
3,636,363,633 Fundraise Shares at the Issue Price by way of the Placing and
the Subscription. The Fundraise Shares are being issued pursuant to the
Company's existing authorities to issue and allot new Ordinary Shares free of
pre-emption rights and will rank pari passu with the Company's existing
Ordinary Shares.

 

Director participation in the Subscription

 

David Levi, CEO, has subscribed for 181,818,181 Subscription Shares at the
Issue Price. On Admission, David Levi's interest in the Company's Ordinary
Shares shall comprise 223,522,797 Ordinary Shares representing approximately
4.44% of the Company's enlarged issued share capital (as enlarged by the
Placing Shares and the Subscription Shares).

 

Yossi Albagli, Chairman, has subscribed for 4,545,454 Subscription Shares at
the Issue Price. On Admission, Yossi Albagli interest in the Company's
Ordinary Shares shall comprise 5,723,393 Ordinary Shares representing
approximately 0.11% of the Company's enlarged issued share capital (as
enlarged by the Placing Shares and the Subscription Shares).

 

Further details of these director transactions are set out in the FCA
notification forms, made in accordance with the requirements of the UK Market
Abuse Regulation, which are appended further below.

 

Related party transaction

 

David Levi and Yosi Albagli are directors of the Company and, as such, are
considered related parties of the Company for the purposes of the AIM Rules
for Companies. The participation of David Levi and Yosi Albagli in the
Subscription constitutes a related party transaction pursuant to Rule 13 of
the AIM Rules for Companies. The Company's independent directors (excluding Mr
Levi and Mr Albagli), having consulted with the Company's nominated adviser,
Allenby Capital Limited, consider that the terms of the participation of David
Levi and Yosi Albagli in the Subscription are fair and reasonable insofar as
the Company's shareholders are concerned.

 

Warrants

 

Investors in the Fundraise will be issued with one Warrant for each Fundraise
Share subscribed for resulting in the issue of 3,636,363,633 Warrants. The
Warrants will be exercisable at the Issue Price of 0.022p for a period of 12
months from Admission. The Warrants are not transferable and will not be
traded on an exchange. The Warrants contain an accelerator clause such that
the Company may serve notice ("Notice") on the Warrant holders to exercise
their Warrants in the event that the closing mid-market share price of the
Company's Ordinary Shares trade at 0.045p or more over a consecutive five-day
trading period from date of Admission. In the event the Company serves Notice,
any Warrants remaining unexercised after seven calendar days following the
issue of the Notice will be cancelled. Exercise of the Warrants in full
(excluding the Broker Warrants) would raise an additional £800,000 for the
Company.

 

Broker Warrants

 

CMC and Peterhouse have been issued a further 73,522,727 warrants and
89,886,359 warrants respectively (the "Broker Warrants"). The Broker Warrants
are on the same terms as the Warrants issued to the participants of the
Fundraise, including the acceleration clause set out above.

 

Admission to trading

 

Application is being made for admission of the 3,636,363,633 Fundraise Shares
to trading on AIM ("Admission") and Admission is expected to occur at 8.00
a.m. on or around 7 May 2025.

 

Total voting rights

 

Following Admission, the Company's enlarged issued share capital will be
5,036,363,633 Ordinary Shares. The Company holds no Ordinary Shares in
Treasury. This figure of 5,036,363,633 Ordinary Shares may be used by
shareholders in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest in, or a
change in their interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.

 

For further information, please contact:

 

 Ethernity Networks Ltd                                         Tel: +972 3 748 9846
 David Levi, Chief Executive Officer

 Tomer Assis, Chief Financial Officer

 Allenby Capital Limited (Nominated Adviser and Joint Broker)   Tel: +44 (0)20 3328 5656
 James Reeve / Piers Shimwell (Corporate Finance)

 Amrit Nahal / Stefano Aquilino (Sales and Corporate Broking)

 CMC Markets UK plc (Joint Broker)                              Tel: +44 (0)20 3003 8632
 Douglas Crippen

 Peterhouse Capital Limited (Joint Broker)                      Tel: +44 (0)20 7562 0930
 Lucy Williams / Duncan Vasey

 

 

About Ethernity Networks

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF) provides innovative,
comprehensive networking and security solutions on programmable hardware,
enhancing telco/cloud network infrastructure capacity. Ethernity's
semiconductor logic offers data processing functionality for various
networking applications, alongside patented wireless access technology and
fiber access media controllers, all equipped with control software boasting a
rich set of networking features. Ethernity's solutions swiftly adapt to
customers' evolving needs, accelerating time-to-market and facilitating the
deployment of 5G over wireless and fiber infrastructure.

 

Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them

 

 1    Details of the person discharging managerial responsibilities / person closely
      associated
 a)   Name                                                         1.   David Levi, CEO

                                                                   2.   Yosi Albagli, Chairman
 2    Reason for the notification
 a)   Position/status                                              As per 1 a)
 b)   Initial notification /Amendment                              Initial notification
 3    Details of the issuer, emission allowance market participant, auction
      platform, auctioneer or auction monitor
 a)   Name                                                         Ethernity Networks Ltd.
 b)   LEI                                                          213800LZJO33QBNXU496
 4    Details of the transaction(s): section to be repeated for (i) each type of
      instrument; (ii) each type of transaction; (iii) each date; and (iv) each
      place where transactions have been conducted
 a)   Description of the financial instrument, type of instrument  Ordinary shares of NIS 0.001 nominal value each

      Identification code

                                                                   ISIN: IL0011410359
 b)   Nature of the transaction                                    Acquisition of new ordinary shares in Subscription
 c)   Price(s) and volume(s)

 
                                                                                     Price(s)          Volume(s)
                                                                                     1.   0.022p       181,818,181

                                                                                     2.   0.022p       4,545,454
 d)   Aggregated information                                       N/a - single transactions
 e)   Date of the transaction                                      30 April 2025
 f)   Place of the transaction                                     Outside a trading venue

 

 

 1    Details of the person discharging managerial responsibilities / person closely
      associated
 a)   Name                                                         1.   David Levi, CEO

                                                                   2.   Yosi Albagli, Chairman
 2    Reason for the notification
 a)   Position/status                                              As per 1 a)
 b)   Initial notification /Amendment                              Initial notification
 3    Details of the issuer, emission allowance market participant, auction
      platform, auctioneer or auction monitor
 a)   Name                                                         Ethernity Networks Ltd.
 b)   LEI                                                          213800LZJO33QBNXU496
 4    Details of the transaction(s): section to be repeated for (i) each type of
      instrument; (ii) each type of transaction; (iii) each date; and (iv) each
      place where transactions have been conducted
 a)   Description of the financial instrument, type of instrument  Ordinary shares of NIS 0.001 nominal value each

      Identification code

                                                                   ISIN: IL0011410359
 b)   Nature of the transaction                                    Grant of warrants
 c)   Price(s) and volume(s)

 
                                                                                   Exercise Price(s)  Volume(s)
                                                                                   1.   0.022p        181,818,181

                                                                                   2.   0.022p        4,545,454
 d)   Aggregated information                                       N/a - single transactions
 e)   Date of the transaction                                      30 April 2025
 f)   Place of the transaction                                     Outside a trading venue

 

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