REG - Ethernity Networks - Update re. Subscription agreement & Notice of GM

Ethernity NetworksAnnouncement

10/11/2023 07:00

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RNS Number : 0147T  Ethernity Networks Ltd  10 November 2023

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse (amendment)
(EU Exit) Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

10 November 2023

Ethernity Networks Ltd

("Ethernity" or the "Company")

 

Update Regarding Subscription Agreement and TVR

 

Notice of General Meeting

 

Ethernity Networks Ltd (AIM: ENET; OTCMKTS: ENETF), a leading supplier of
networking processing semiconductor technology ported on field programmable
gate arrays for virtualised networking appliances, announces the following
update on the share subscription agreement with 5G Innovation Leaders Fund LLC
(the "Subscriber"), details of which were announced on 25 February 2022 (the
"Subscription Agreement").

 

On 24 October 2023, the Company announced that it was engaging with the
Subscriber to seek to come to an agreed position in relation to the
Subscription Agreement. The Company is pleased to announce that it has now
entered into a settlement deed with the Subscriber (the "Agreement"), pursuant
to which the Company will issue a fixed number of shares to the Subscriber,
terminate the Subscription Agreement, and extinguish the Company's liability
to the Subscriber.

 

Pursuant to the Agreement, the Company will issue up to a maximum of
150,000,000 new ordinary shares of NIS 0.001 each in the Company ("Ordinary
Shares") to the Subscriber (the "Settlement Shares"). The Settlement Shares
will be issued to the Subscriber in tranches, subject to the restriction that
the Subscriber cannot hold an interest in more than 24.99% of the Company's
issued share capital from time to time.

 

The Company has issued and allotted an initial 44,900,000 Ordinary Shares (the
"Tranche 1 Shares"), conditional on their admission to trading on AIM,
pursuant to the Company's existing share authorities. It will issue a further
43,600,000 Ordinary Shares to the Subscriber on receipt of a notice from the
Subscriber, also pursuant to the Company's existing share authorities. Subject
to the Company receiving shareholder approval for an increase in its headroom
to allot shares free from pre-emptive or other preferential rights or other
rights or restrictions, the Company will issue a further 61,500,000 new
Ordinary Shares (the "Conditional Subscription Shares") to the Subscriber on
receipt of subsequent notices. Out of the 61,500,000 Conditional Subscription
Shares, 50,000,000 can be issued only provided that the market price of an
Ordinary Share exceeds 0.3p at the time of issue. Ethernity will shortly be
convening a general meeting ("General Meeting") of the Company to seek
shareholder approval for an increase in its authorities to allot shares on a
non-preemptive basis.

 

Subject to the passing of the resolutions at the General Meeting, the
Subscriber will have until the thirtieth calendar day after the date of the
General Meeting to notify the Company to issue the Settlement Shares in full
(the "Issuance Notice Period"). Should the Subscriber not call the entire
allotment of the Settlement Shares during the Issuance Notice Period, the
Company will have no further obligation to the Subscriber at the end of the
Issuance Notice Period.

 

The entering into of the Agreement has been approved by the Court in Lod in
accordance with the requirements of the ongoing temporary suspension of
proceedings to which the Company is subject ("TSP") process. Pursuant to the
Agreement, should the resolutions not be passed at the General Meeting, the
Company would have an outstanding debt to the Subscriber of US$600,000 to
reflect the non-issue of the Conditional Subscription Shares.  The Directors
of Ethernity believe that this debt could seriously adversely impact the
Company's ability to exit the TSP process and therefore strongly recommends
that shareholders vote in favour of the resolutions at the General Meeting.

 

Notice of General Meeting

A circular convening the General Meeting of the Company, to be held at 3rd
Floor Beit Golan, 1 Golan St. Corner HaNegev, Airport City 7019900, Israel at
11:00 a.m. IST (09:00 a.m. GMT) on 14 December 2023 will be posted to
shareholders shortly and will be made available on the Company's website at:
https://ethernitynet.com/investors/ (https://ethernitynet.com/investors/) .

 

As previously announced, in order to exit the TSP, it is expected that the
Company will be required to raise additional funds. Whilst the structure of
this is not yet known, the Board believes it is prudent to put in place
sufficient authorities to permit an equity fundraising, should that be the
required route. The resolutions at the General Meeting are therefore seeking
sufficient headroom over and above those required to issue the Conditional
Subscription Shares. Should any fundraise takes place, the Company will
prioritise structures that would enable existing shareholders to participate
on the same terms as any incoming investors.

 

Application for admission and total voting rights

 

Application has been made to the London Stock Exchange for the Tranche 1
Shares to be admitted to trading on AIM ("Admission"), and Admission is
expected to occur on or around 14 November 2023. The shares will, upon
Admission, rank pari passu with the existing Ordinary Shares of the Company.

 

Following Admission, the Company's enlarged issued share capital will be
194,121,091 Ordinary Shares. The Company holds no Ordinary Shares in Treasury.
This figure of 194,121,091 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.

 

Holdings in Company

 

On Admission, the Tranche 1 Shares will represent 23.13% of the Company's
issued share capital as enlarged by the issue of those shares. The Subscriber
has confirmed to the Company that it currently holds no Ordinary Shares.
Therefore, its interest in the Company's share capital following Admission
will be 23.13% of the Company's issued share capital.

 

For further information, please contact:

 

 Ethernity Networks Ltd                                         Tel: +972 8 915 0392
 David Levi, Chief Executive 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)

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

 

 

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