REG - Tern PLC - Device Authority convertible loan note funding

TernAnnouncement

28/10/2022 08:00

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RNS Number : 4774E  Tern PLC  28 October 2022

 

28 October 2022

 

Tern Plc

("Tern" or the "Company")

 

Device Authority convertible loan note funding

 

Tern Plc (AIM:TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, announces that Device Authority Limited
("Device Authority"), of which Tern currently owns 53.8% of the equity, has
completed a US$440,000 working capital funding in the form of unsecured
convertible loan notes (the "Convertible Notes") from Tern and certain of its
other existing shareholders, including Venafi and Alsop Louie Partners.  Tern
has subscribed for approximately US$303,401 of Convertible Notes, representing
approximately 69% of the total funding.

 

The Convertible Notes and accrued interest (at a rate of 9% per annum) are
repayable or convertible into Device Authority equity, at the holder's
election, at the earlier of the maturity date of 30 June 2023 (the "Maturity
Date"), and inter alia, on a change of control of Device Authority, or on
Device Authority completing a qualifying fundraise, being a new equity
financing of Device Authority which raises aggregate gross cash proceeds of at
least US$5 million.

 

On a change of control of Device Authority prior to the Maturity Date, being a
sale or disposal of the business as defined in Device Authority's Articles of
Association, the Convertible Note holders will be entitled to a premium
payment equal to 300% of the original principal amount of the Convertible
Notes, or at the discretion of the Convertible Note holders the outstanding
principal amount and accrued interest may be converted into the most senior
class of share at a 30% discount to the price paid for the shares sold at the
change of control.  Additionally, subscribers to the Convertible Notes have
received warrants to acquire additional Device Authority equity at a fixed
price, exercisable on a change of control of Device Authority prior to the
Maturity Date (the "Warrants").

 

Alternatively, should Device Authority complete a qualifying fundraise before
the Maturity Date, the Convertible Notes are convertible into Device Authority
equity at a 30% discount to the fundraising price. If a qualifying fundraise
occurs the Warrants will expire and become non-exercisable. The Convertible
Notes provide for customary events of default.

 

The valuation of Tern's holding in Device Authority, as stated in the
Company's unaudited interim results for the six months to 30 June 2022, was
£16.3 million. Based on Device Authority's latest statutory accounts for the
year ended 31 December 2021, as at that date it had net assets of £3,824,398
and incurred a loss for the year of £2,185,382. Given the historic nature of
these figures Tern does not consider this to be representative of the current
business and trading performance of Device Authority.

 

Tern also currently has loans of approximately US$175,000 to Device Authority,
which are short-term, non-convertible, unsecured loans.

 

Commenting Al Sisto, CEO of Tern, said:

 

"As outlined at the time of Tern's recent fundraise, the use of proceeds
included capital that we can deploy to provide further funding for Tern's
portfolio companies, both protecting Tern's position and providing them with
the growth capital they require.

 

"We are delighted with the progress Device Authority is continuing to make and
we are very happy to continue to support its working capital needs as it
continues to grow its monthly recurring revenues through its subscription base
and modularised licence platform, KeyScaler®.

 

"The Board remains focussed on continuing to maximise the investment value for
Tern shareholders and I look forward to making further announcements in due
course."

 

Enquiries

 

 Tern Plc                                                     via IFC Advisory

 Al Sisto (CEO)

 Sarah Payne (CFO)

 Allenby Capital Limited                                      Tel: 0203 328 5656

 (Nominated Adviser and Broker)

 David Worlidge / Alex Brearley (Corporate Finance)

 Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)

 IFC Advisory                                                 Tel: 0203 934 6630

 (Financial PR and IR)                                        tern@investor-focus.co.uk (mailto:tern@investor-focus.co.uk)

 Tim Metcalfe

 Graham Herring

 Florence Chandler

 

About Device Authority

 

Device Authority is a global leader in Identity and Access Management (IAM)
for the IoT; focused on the automotive, medical device (IoMT) and industrial
(IIoT) sectors. Device Authority's KeyScaler™ platform provides zero touch
provisioning and complete automated lifecycle management for securing IoT
devices and data at scale, with frictionless deployment across device
provisioning, authentication, credential management, policy based end-to-end
data security/encryption and secure OTA (over the air) and HSM (hardware
security module) updates.

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