REG - Ethernity Networks - Placing, CLN and Notice of EGM

Ethernity NetworksAnnouncement

06/11/2025 07:00

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RNS Number : 3945G  Ethernity Networks Ltd  06 November 2025

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6 November 2025

Ethernity Networks Limited

("Ethernity" or the "Company")

 

Placing, Convertible Loan Note and Notice of EGM

 

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 proposed fundraising of £342,500 (approximately
US$447,000) before expenses (the "Fundraising") and provides notice of an
extraordinary general meeting of the Company (the "EGM"). The Fundraising
comprises:

 

·      A placing of 711,427,301 new ordinary shares of NIS 0.001 each
("Ordinary Shares") at an issue price of £0.0002249 (0.02249p) per share (the
"Placing Price") to raise a total of £160,000 (the "Placing"); and

·      The issuance of a convertible loan note to raise a further
£182,500 (the "CLN").

 

The Fundraising is being undertaken by Peterhouse Capital Limited
("Peterhouse").

 

Notice of EGM

Due to the Company's current inability to issue new Ordinary Shares below
their par value of NIS 0.001 (0.02249p) ("Current Par Value"), the board of
Ethernity ("Board") is proposing to reclassify the Company's share capital to
a no par value ("NPV") structure. This would result in the reclassification of
each Ordinary Share of NIS 0.001 each into one ordinary share of NPV (the "NPV
Ordinary Shares") (the "Reclassification"). This change will provide greater
flexibility for future equity issuances and is a key condition for the CLN
conversion terms, as detailed further below.

 

Under Israeli Companies Law, the par value of the Company's shares can be
reclassified following the approval of a reclassification resolution at a
general meeting of the Company. The Company is therefore convening the EGM, to
be held at 11.00 a.m. Israel time (9.00 a.m. UK time) at the offices of the
Company at 3rd Floor Beit Golan, 1 Golan St., Corner HaNegev, Airport City
7019900, Israel on 2 December 2025. At the EGM, shareholders will be asked to
approve resolutions to enable:

 

·      the Reclassification and associated amendments to the Company's
articles of association; and

·      an increase in the Company's authorities to allow the issue and
allotment of up to 15,000,000,000 shares on a non-pre-emptive basis (together,
the "EGM Resolutions").

 

Background to and reasons for the Fundraising

In its interim results for the six months ended 30 June 2025 ("Interims"), the
Company announced its revised strategy for the commercialisation of the ASIC
opportunity. The Company is actively engaged in discussions with leading
semiconductor vendors regarding a potential partnership to develop an ASIC
solution targeting the wireless backhaul and broadband access markets. These
discussions are supported by strong interest from Tier-1 wireless backhaul
equipment vendors.

 

As announced in the Interims, whilst the revised ASIC opportunity would have a
significantly lower capital requirement for Ethernity, the Company is required
to raise funds to meet its immediate working capital needs and is therefore
undertaking the Fundraising. The Directors also believe that the Fundraising
will strengthen the Company's position in its negotiations with semiconductor
vendors and assist with progress towards a strategic collaboration.

 

Use of Proceeds

The net proceeds of the Fundraising will be used to support the Company's
general working capital requirements and repay short-term debt and creditor
obligations, which amount to several tens of thousands of U.S. dollars per
month. It is anticipated that the Company will be required to raise additional
funds within the next 12 months.

 
Details of the Placing

The Company has conditionally raised a total of £160,000 via the Placing
through the issue of 711,427,301 Ordinary Shares (the "Placing Shares") at the
Placing Price of 0.02249p, which is equal to the Current Par Value. The
Placing Shares have been issued utilising the Company's existing authorities
to issue new Ordinary Shares on a non-pre-emptive basis. The Placing Price
represents a premium of 87% to the closing mid-market price of an Ordinary
Share on 5 November 2025.

 

Details of the CLN

The Company has conditionally raised a further £182,500 via the issuance of
the CLN. In recognition of participating in the Placing at a premium to the
current share price, investors in the Placing are participating in the CLN on
a pro rata basis. The CLN is unsecured and is not interest bearing. The CLN
maturity date is 5 December 2025. Holders of the CLN will be required to pay
the CLN subscription amounts to the Company by  5 December 2025. On maturity,
the CLN will automatically convert into ordinary shares in the Company,
calculated as follows:

 

·      If the EGM Resolutions are passed, once the Reclassification
completes the CLN will automatically convert into 4,284,037,559 new NPV
Ordinary Shares at a conversion price of £0.0000426 (0.00426p), representing
a discount of 65% to the closing mid-market price of an Ordinary Share on 5
November 2025. These shares would be issued utilising the share issuance
authorities granted at the EGM.

 

·      If the EGM Resolutions are not passed, the Company will attract a
428% penalty charge under the CLN, equivalent to £780,980. As a result, the
amount due under the CLN will increase to £963,480. The CLN will
automatically convert at a conversion price of 0.02249p, being the Current Par
Value, resulting in the issue of 4,284,037,559 new Ordinary Shares. These
shares would be issued utilising the Company's existing authorities to issue
new Ordinary Shares on a non-pre-emptive basis.

 

As a result, a total of 4,284,037,559 new shares in the share capital of the
Company will be issued pursuant to the CLN conversion (the "Subscription
Shares" and, together with the Placing Shares, the "Fundraising Shares"). In
total, 4,995,464,860 Fundraising Shares will be issued, equivalent to 50% of
the Company's share capital as would be enlarged by the Fundraising. Based on
the cash that the Company will receive pursuant to the Fundraising and the
total number of Fundraising Shares that will be issued, the average
theoretical price at which the Fundraising Shares have been issued is 0.0065p,
representing a discount of 43% to the closing mid-market price of an Ordinary
Share on 5 November 2025. The Fundraising Shares will rank pari passu with the
Company's existing ordinary share capital.

 

 
Details of the Reclassification

Assuming the passing of the EGM Resolutions, each existing Ordinary Share will
be automatically reclassified as a NPV Ordinary Share. On completion of the
Reclassification, the Company's shares will continue to trade on AIM under the
existing depository interest under the current ISIN IL0011410359 and existing
ticker "ENET". Existing share certificates should be retained and will remain
valid following the Reclassification.

 

The elimination of the nominal value of the Ordinary Shares is not intended to
modify the rights of existing shareholders of Ethernity ("Shareholders"),
however Shareholders should be aware that the Company would be able to issue
and allot NPV Ordinary Shares at an issue price below the Current Par Value.
The Directors consider that it is appropriate to undertake the
Reclassification to facilitate the Fundraising and provide the Company with
flexibility and improved prospects for accessing future capital.

 

The timetable for the Reclassification is as follows:

 

                                                                              Date and time*
 Posting of the EGM notice                                                    06 November 2025

 Latest time and date for receipt of forms of direction and electronic proxy  9:00 a.m. on 27 November 2025
 appointments via the CREST system

 Latest time and date for receipt of forms of proxy                           9:00 a.m. on 28 November 2025

 EGM                                                                          9:00 a.m. on 02 December 2025

 Change in the nominal value of Ordinary Shares of NIS 0.001 each to NPV      05 December 2025

*all times refer to UK time

 
Admission to Trading

Application will be made for the admission of the 711,427,301 Placing Shares
to trading on AIM ("Admission"). Admission is expected to occur at 8.00 a.m.
on or around 12 November 2025.

 

Total Voting Rights

Following Admission, the Company's enlarged issued share capital will comprise
5,747,790,934 Ordinary Shares. The Company holds no shares in treasury. This
figure may be used by shareholders for the purposes of the FCA's Disclosure
Guidance and Transparency Rules.

 

David Levi, Chief Executive Officer, commented: "Based on the strong interest
expressed by leading wireless backhaul vendors in securing the planned ASIC
from our prospective semiconductor partner, I believe this Fundraising will
enable the Company to advance its ASIC strategy and hopefully execute on a
potential collaboration. This represents a significant step towards delivering
a differentiated solution for the wireless backhaul and broadband access
markets."

 
For further information, please contact:

 

 Ethernity Networks Ltd                                        Tel: +972 3 748 9846
 David Levi, CEO

 Tomer Assis, CFO

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

 Amrit Nahal (Sales & Broking)

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

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

 
About Ethernity Networks

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF) provides innovative
networking and security solutions on programmable hardware, enhancing
telco/cloud infrastructure capacity. Its semiconductor logic enables advanced
data processing for networking applications, alongside patented wireless
access and fiber media controllers. Ethernity's solutions accelerate
time-to-market and support the deployment of 5G over wireless and fiber
infrastructure.

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