REG - Tern PLC - Notice of General Meeting

TernAnnouncement

31/08/2023 07:00

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RNS Number : 8575K  Tern PLC  31 August 2023

31 August 2023

Tern Plc

("Tern" or the "Company")

Notice of General Meeting

Confirmation of Board and Management Changes

Tern Plc (AIM: TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, announces that it will today send a
circular to the Company's shareholders containing a notice convening a general
meeting of the Company which is to be held at 9.00 a.m. on 26 September 2023
at the offices of Reed Smith, The Broadgate Tower, 20 Primrose Street, London
EC2A 2RS (the "General Meeting"). The circular will be available shortly on
the Company's website at https://www.ternplc.com/aim-rule-26
(https://www.ternplc.com/aim-rule-26) .

The resolutions to be proposed at the General Meeting (the "Resolutions") are
to grant authority to the directors of the Company (the "Directors") to issue
new ordinary shares of 0.02p in the capital of the Company ("Ordinary Shares")
and the disapplication of pre-emption rights in relation to such an issue of
new Ordinary Shares. Following consultation with a number of the Company's
larger shareholders and feedback kindly submitted by others, the resolutions
have been revised to permit a lower number of new Ordinary Shares to be
authorised for potential issue by the Directors than was sought in the
resolutions which were proposed at the Company's Annual General Meeting held
on 29 June 2023 (the "2023 AGM").

Background and reasons for the Resolutions

At the 2023 AGM, resolutions to grant the Directors the authority to allot
securities and to grant the Directors the authority to issue new Ordinary
Shares for cash did not achieve the requisite number of votes to be passed.
Following the failure to pass these resolutions at the 2023 AGM, the Directors
do not currently have the authority to issue any new Ordinary Shares for cash
or generally.

The Directors believe that having the authority to issue new Ordinary Shares
is important for an investment company such as Tern as it:

·    provides the Company with the flexibility to raise, or have access
to, funding to support its portfolio companies, as required, where such
funding:

o gives the Company negotiating leverage when dealing with potential
third-party investors in discussions regarding the funding of Tern's portfolio
companies; and

o enables the Company to participate, potentially at short notice, in
potential fundraisings by its portfolio companies. If this is not possible,
the Company could find that either, or both, its shareholdings in its
portfolio companies are diluted and their valuation reduces, which may then
adversely impact upon the Company; and

·    in particular, having the ability to issue new Ordinary Shares would
enable the Company to potentially access the remaining £2.5 million of the
£3.0 million loan facility (the "Facility") entered into on 12 June 2023,
which requires warrants over Ordinary Shares to be issued in relation to any
drawdown under the Facility. The Directors' current preference is that the
Company's funding requirements are satisfied through seeking further drawdowns
under the Facility rather than seeking to raise funds via the issue of new
Ordinary Shares or disposing of portfolio holdings at a time that they believe
may not be in the best interests of the Company and its shareholders. Without
the Directors having the authority to issue Ordinary Shares and to disapply
pre-emption rights the Company is unable to make any further drawdowns from
the Facility.

The Resolutions would permit the Directors to issue up to 37,500,000 new
Ordinary Shares (representing approximately 9.6 per cent. of the Company's
existing issued ordinary share capital) generally and for cash whilst
dis-applying the pre-emption rights of existing shareholders in relation to
such an issue.

As announced on 10 August 2023, following the 2023 AGM, the Company has made a
number of management changes, including to the Board of the Company and the
Company's management structure that are overall expected to save approximately
40% of the Company's overall central costs in 2024, when compared to the level
for 2022. This Board and management restructuring is intended to provide an
appropriate governance and management structure for the Company, at
significantly reduced cost, as the Company seeks to realise value from its
portfolio of IoT technology businesses. It is the Board's intention that the
Company will not invest in any companies or entities not already part of
Tern's existing portfolio until such time as the Company has realised material
value from its current portfolio companies.

However, should the Resolutions not be passed the Company will likely be
required to seek to satisfy its further funding requirements from the disposal
of holdings in its portfolio in the short-term and in a timeframe and
potentially in a manner that may not be in the best interests of the Company
and its shareholders. In these circumstances the Directors believe that the
Company may also suffer greater dilution of its remaining portfolio holdings
than if the Company was able to drawdown further on the Facility or had access
to potential funding through the issue of new Ordinary Shares. The Directors
believe that failure to pass the Resolutions will likely therefore result in a
lower value being ultimately achieved for the Company's shareholders than if
they are passed.

Confirmation of Board and management changes

Further to the announcement made by the Company on 10 August 2023 detailing a
Board and management restructuring, the Company can confirm that Matthew
Scherba has, as anticipated, now transitioned to the full time Chief Executive
Officer position at InVMA Limited, trading as Konektio, a Tern portfolio
company, and has therefore left Tern's employment.

Sarah Payne will step down as the Company's Chief Financial Officer and
Company Secretary on 15 September 2023 to take up a position with another
company, but will remain on the Board as a Non-Executive Director, as
previously announced. The Company has appointed a part-time Chief Financial
Officer, a non-Board position, and will be outsourcing the Company Secretary
function.

 

Enquiries:

 Tern Plc                                                                 via IFC Advisory

 Ian Ritchie (Chairman)

 Allenby Capital Limited                                                  Tel: 0203 328 5656

 (Nominated Adviser and Broker)

 Alex Brearley / Nick Naylor / 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 (mailto:tern@investor-focus.co.uk)

 Tim Metcalfe

 Graham Herring

 Florence Chandler

 

 

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