REG - Tern PLC - Funding facility

TernAnnouncement

12/06/2023 11:45

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RNS Number : 4159C  Tern PLC  12 June 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018).  UPON THE PUBLICATION OF THIS
ANNOUNCEMENT THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE WITHIN THE PUBLIC
DOMAIN.

12 June 2023

 

Tern Plc

("Tern" or the "Company")

 

Funding facility

 

Tern Plc (AIM:TERN), the investment company specialising in supporting high
growth, early-stage, disruptive Internet of Things ("IoT") technology
businesses, announces that it has signed a loan facility agreement (the
"Facility") with an investor (the "Investor") to provide a loan facility of up
to £3.0 million, available for up to 36 months.

The Directors intend that the Facility will be used to provide Tern with a
stronger negotiating position and access to funding for follow-on investment
opportunities in future syndicated fundraises undertaken by Tern's existing
portfolio companies.

The Facility provides for an initial drawdown (the "Initial Advance") of
£500,000, which the Company has drawn down, with further drawdowns being
subject to the conditions of the Facility at that point in time.  Funds
advanced under the Facility will attract a fixed interest rate of 1.0% per
calendar month and will be repayable with accrued interest, in equal monthly
instalments, commencing 180 days from the date of drawdown until the end of
the 18 month term of each drawdown.

The Company may repay any amounts drawn down under the Facility in cash and it
is the Directors current intention that any amounts drawn down under the
Facility will be repaid from the proceeds from the full or partial exit of one
or more of its current investments.

Alternatively, the Company may settle any outstanding amounts owed as monthly
repayments through the issue of new ordinary shares of 0.02p each in the
Company (the "Ordinary Shares") (a "Non-cash Repayment").  Following any
decision by the Company to make a Non-cash Repayment the Investor will be
automatically granted conversion rights over such drawndown principal and
interest balances that were due pursuant to a repayment (the "Conversion
Rights").  Pursuant to such Conversion Rights, the Investor will then have
the right for 12-months to convert such amounts into Ordinary Shares. For the
first 10 trading days following a Non-cash Repayment, the Investor may require
that the Company satisfies the principal and interest balances that are due
via the sale of shares in Wyld Networks AB ("Wyld") held via the Wyld Escrow
Facility (as defined below). Following these 10 trading days, the Investor may
exercise its Conversion Rights and subscribe for Ordinary Shares to satisfy
the principal and interest balances that remain outstanding. In respect of its
Conversion Rights, the Investor may subscribe for Ordinary Shares at a price
per share equal to the lower of: (i) 90% of the average of the lowest five
daily volume weighted average share prices of the Ordinary Shares on AIM
("VWAPs") in the 20 trading days preceding a Non-cash Repayment (the "Adjusted
Issue Price"); or (ii) an amount equal to 130% of the average of the daily
VWAPs for the 5 trading days immediately prior to the applicable drawdown date
If at the end of the relevant 12 month period such conversion has not occurred
and/or repayment has not been satisfied via the sale of shares in Wyld held
via the Wyld Escrow Facility (as defined below), then any balance outstanding
shall be paid to the Investor in cash by the Company.

The Investor shall receive warrants (the "Warrants") equal to 50% of the value
of each drawdown divided by the average of the daily VWAP for the five trading
days immediately prior to the applicable drawdown date (the "Reference
Price"), with a 36-month term to expiry from the date of issuance.  The
warrants are exercisable into new Ordinary Shares at a subscription price
being equal to 150% of the then prevailing Reference Price.  With regards to
the Initial Advance, the Investor has received 5,524,007 warrants with an
exercise price of 6.78855 pence per Ordinary Share.  If these Warrants were
to subsequently be exercised in full, it would result in the issue of
5,524,007 new Ordinary Shares raising gross proceeds of £375,000 for the
Company.  In the event that the Company prepays the Facility, in whole or in
part, then the Warrants shall be repriced to the average of the daily VWAPs
for the five trading days prior to the date of the prepayment, if such value
is less than the existing exercise price of the Warrants.  If the Company
issues and allots new Ordinary Shares at an issue price that is below the
exercise prices of the Warrants (other than pursuant to the Facility) within
18 months of each drawdown, the exercise prices of the relevant Warrants shall
be amended to be equivalent to that issue price to the extent any Warrants
remain unexercised.

Pursuant to the Facility's terms, for the Initial Advance the Company has
issued new Ordinary Shares in settlement of a Facility implementation fee of
£50,000 in the amount of 1,104,801 new Ordinary Shares at a deemed price of
4.5257 pence per share (the "Implementation Fee Shares") being a price
equivalent to the daily VWAPs for the five trading days prior to the date of
the Facility. Any further drawdowns under the Facility will incur a Facility
implementation fee equal to 7% of the amount drawn down if paid in cash, or
10% of the amount drawn down if settled via the issue of new Ordinary Shares
in the Company at an issue price equivalent to the daily VWAPs for the five
trading days prior to the date of such draw down (the mechanism of settlement
in Ordinary Shares or cash is at the election of the Company).

As security for the Facility, the Company will, inter alia, place in an escrow
account shares in Wyld owned by the Company, which are to be maintained at a
value not less than 1.5 times the value of any outstanding amount drawn down
and accrued interest under the Facility ("the Wyld Escrow Facility").

The Company has provided a number of warranties and undertakings to the
Investor pursuant to the Facility. The Facility is also subject to certain
events of default and default processes, which include demanding repayment of
the Facility's principal and interest, and the Investor being able to satisfy
such repayment via the sale of shares in Wyld utilising the security
arrangements via the Wyld Escrow Facility and/or  following a continuing
event of default the Investor may subscribe for Ordinary Shares at a
discounted price per share.  In the event of a default, the Facility also
provides for additional monthly interest, applicable to any and all
outstanding principal, interest and fees that have become payable.

The Company shall be entitled to prepay the Facility at any time, in whole or
in part, provided that a prepayment fee representing 10% of the balance being
repaid is paid at the time of such prepayment. Once repaid or prepaid the
Facility may not be redrawn unilaterally by the Company.

Admission and Total Voting Rights

Application will be made for the Implementation Fee Shares to be admitted to
trading on AIM ("Admission") and it is expected that Admission will take place
on or around 16 June 2023.

In accordance with the Financial Conduct Authority's Disclosure, Guidance and
Transparency Rules, the Company confirms that following Admission, the
Company's enlarged issued ordinary share capital will comprise 389,676,311
Ordinary Shares. The Company does not hold any shares in Treasury.
Therefore, from Admission, the total number of voting rights in the Company
will be 389,676,311 and this figure may be used by shareholders in the Company
as the denominator for the calculations to determine if they are required to
notify their interest in, or a change to their interest in the Company, under
the Disclosure Guidance and Transparency Rules.

Enquiries

 

 Tern Plc                                                     via IFC Advisory

 Al Sisto (CEO)

 Sarah Payne (CFO)

 Allenby Capital Limited                                      Tel: 0203 328 5656

 (Nominated Adviser and Broker)

 Alex Brearley / Dan Dearden-Williams (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

 Tim Metcalfe

 Graham Herring

 Florence Chandler

 

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