REG - Tern PLC - Statement re Wyld Networks Rights Issue

TernAnnouncement

02/09/2024 10:30

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RNS Number : 5281C  Tern PLC  02 September 2024

2 September 2024

 

Tern Plc

("Tern")

 

Statement re Wyld Networks Rights Issue

Tern Plc (AIM:TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, announces that, Wyld Networks AB ("Wyld
Networks") has today announced that the board of directors of Wyld Networks
has, subject to approval from a subsequent extraordinary general meeting,
resolved to carry out a new issue of units, containing shares and warrants of
series TO6, with preferential rights for existing shareholders of
approximately SEK 74.2 million (the "Wyld Networks Rights Issue") (the "Wyld
Networks Announcement").

Tern currently holds a total of 4,106,666 shares in Wyld Networks, which
represents approximately 19.9% of Wyld Networks' current issued share capital.

Tern is considering its position in relation to the Wyld Networks Rights
Issue. Further announcements will be made as appropriate.

The full Wyld Networks Announcement may be accessed: Here
(https://wyldnetworks.com/press-releases?release=6F3D663CD8500EC8)

Extracted from the Wyld Networks Announcement:

The board of directors of Wyld Networks AB ("Wyld Networks" or the "Company")
has today, subject to approval from the subsequent extraordinary general
meeting, resolved to carry out a new issue of units, containing shares and
warrants of series TO6, with preferential rights for existing shareholders of
approximately SEK 74.2 million (the "Rights Issue"). The subscription period
runs during the period from and including October 9, 2024, to and including
October 23, 2024. If fully subscribed, the Rights Issue will provide the
Company with approximately SEK 74.2 million before transaction costs. The
Rights Issue is covered to approximately 57.7 percent by subscription
commitments, bottom underwriting commitments and middle underwriting
commitments. Bottom underwriting commitments may be invoked to the extent that
the Rights Issue is not subscribed to 32.0 percent. Middle underwriting
commitments may be invoked to the extent that the Rights Issue is not
subscribed to 57.7 percent. In addition, Wyld Networks intends to secure a
bridge loan of approximately SEK 5.0 million in order to finance the Company
in the short term until the Rights Issue has been completed. Notice to the
extraordinary general meeting will be announced through a separate press
release. The Rights Issue is conditional upon an amendment to the articles of
association, which is also proposed to be resolved upon at the extraordinary
general meeting.

Summary

·      Anyone who is recorded in the share register as a shareholder in
Wyld Networks on the record date October 7, 2024, receives one (1) unit right
for each share in the Company. One (1) unit right entitles the holder to
subscribe for one (1) unit. One (1) unit contains forty (40) shares and twenty
(20) warrants of series TO6.

·      The Rights Issue entails an issue of maximum 20,621,183 units,
corresponding to 824,847,320 shares and 412,423,660 warrants of series TO6.

·      The subscription price in the Rights Issue amounts to SEK 3.6 per
unit, corresponding to SEK 0.09 per share since the warrants of series TO6 are
issued free of charge.

·      Upon full subscription in the Rights Issue, Wyld Networks will
receive approximately SEK 74.2 million before transaction costs. Upon full
exercise of all warrants of series TO6, the Company will receive at most an
additional approximately SEK 49.5 million before transaction costs.

·      The subscription period for the Rights Issue will run from and
including October 9, 2024, to and including October 23, 2024.

·      The Rights Issue is covered to approximately 1.0 percent by
subscription commitments, approximately 31.0 percent by bottom underwriting
commitments and approximately 25.7 percent by middle underwriting commitments.
Therefore, the Rights Issue is covered to approximately 57.7 percent by
subscription commitments and underwriting commitments.

·      To ensure the Company's capital needs until the Rights Issue has
been completed, the Company intends to take out a bridge loan of approximately
SEK 5.0 million.

·      The Rights Issue is subject to approval by the extraordinary
general meeting. Further, the Rights Issue is conditional upon the
extraordinary general meeting approving amendments to the articles of
association.

·      Complete terms and conditions for the Rights Issue as well as
other information about the Company will be set out in the EU Growth
Prospectus which is expected to be published on or about October 4, 2024 (the
"Prospectus").

Comment from the Chairman of the board

"Wyld Networks is in an incredibly exciting commercial position where we have
finally overcome the initial challenges with deliveries, which are so common
in tech companies. This has enabled us to now clear all old debts and
strengthen the company's finances ahead of the next phase, which is to deliver
the large customer orders we have received as efficiently as possible. Due to
a weak market and financial uncertainty, Wyld Networks' value has not been
correctly reflected over the past year, so addressing this issue now feels
necessary. Unfortunately, the company's debt relative to market value was
significant enough to create pressured conditions in the share issue, but it
is thanks to the strong substance of our business that the share issue was
possible at all.

An investment now is an investment in a debt-free Wyld Networks, and I hope as
many of our shareholders as possible will join us on this journey."

- Mats L. Andersson, Chairman of the board of Wyld Networks AB.

Background and rationale in summary

Wyld Networks AB is currently in an expansive commercial phase since the
Company's product offering is considered competitive, and the main challenge
is the speed of customer order deliveries. By the end of the first quarter of
2024, the Company had established more than 60 partnerships and received
significant orders for Wyld Connect® modules, Wyld Connect® terminals, and
the data service. Given the substantial interest in its products, the
Company's board of directors has decided to raise capital through a Rights
Issue to ensure that the Company can meet the growing demand for its products
and expand its market share.

The injected capital through the Rights Issue also aims to support forthcoming
development efforts to implement 5G NB-IoT capability into the Company's
existing LoRaWAN solutions, a move projected to potentially double its
addressable market.

The motive for the Rights Issue aligns with the Company's strategic goal of
offering competitive solutions within satellite IoT networks across various
market segments. In light of this, the Company has assessed that the timing is
appropriate to raise capital through the Rights Issue to address the
increasing demand and accelerate growth.

Due to a temporary production issue that arose shortly after the products
began being delivered in October 2023, the Company's first revenues were
delayed by a quarter from what was previously communicated. As of now, these
production issues have been resolved, but the delay was received negatively by
the market, which reduced the capital inflow from the warrants of series TO4
issued in connection with the Company's financing in the third quarter of 2023
and exercised in April 2024.

To compensate for the reduced capital inflow, the Company implemented a
comprehensive cost-saving program in June 2024, which is gradually taking
effect during Q2/Q3 and is expected to reduce operating expenses by
approximately 30 percent at full impact.

Through the Rights Issue, the Company ensures that future capital needs can be
met without causing concerns about additional issuances. This step enhances
Wyld Networks' financial stability and positions the Company well for
continued growth and development.

The proceeds from the Rights Issue are primarily intended for:

·      Financing of the Company's ongoing operations, approximately SEK
40 million.

·      Repayment of loans, approximately SEK 23 million.

Terms for the Rights Issue

·      The Company's board of directors has decided, subject to
subsequent approval at the extraordinary general meeting of the Company on
October 2, 2024, to carry out the Rights Issue.

·      The Rights Issue entails an issue of a maximum of 20,621,183
units, corresponding to 824,847,320 shares and 412,423,660 warrants of series
TO6.

·      The subscription period will run from and including October 9,
2024, up to and including October 23, 2024.

·      The Rights Issue can initially provide the Company with up to
approximately SEK 74.2 million before transaction costs, which are estimated
to amount to approximately SEK 8.5 million, of which SEK 3.5 million refers to
underwriting compensation.

·      Anyone who is recorded in the share register as a shareholder in
Wyld Networks on the record date October 7, 2024, receives one (1) unit right
for each share in the Company. One (1) unit right entitles the holder to
subscribe for one (1) unit. One (1) unit contains forty (40) shares and twenty
(20) warrants of series TO6.

·      The subscription price is SEK 3.6 per unit, corresponding to SEK
0.09 per share since the warrants of series TO6 are issued free of charge.

Terms for the warrants of series TO6

·      Each warrant of series TO6 entitles the holder to subscribe for
one (1) new share in the Company.

·      The subscription price for subscription of shares by virtue of
the warrants of series TO6 amounts to seventy (70) percent of the
volume-weighted average price of the Company's share during the period from
and including February 17, 2025, up to and including February 28, 2025,
however, not less than the quota value of the share and not more than SEK
0.12.

·      The warrants of series TO6 can be exercised for subscription of
new shares during the period from March 4, 2025, up to and including March 18,
2024.

·      Upon full subscription in the Rights Issue and full exercise of
all warrants of series TO6, the Company may receive up to an additional
approximately SEK 49.5 million.

·      The warrants of series TO6 are intended to be admitted to trading
on Nasdaq First North Growth Market as soon as possible after final
registration with the Swedish Companies Registration Office.

Change in number of shares and share capital and dilution

Upon full subscription in the Rights Issue, the number of shares in the
Company will increase by a maximum of 824,847,320 shares, from 20,621,183
shares to a maximum of 824,468,503 shares and the share capital by a maximum
of SEK 68,825,510.97164 from SEK 1,720,637.774291 to SEK
70,546,148.745931. For existing shareholders who do not participate in the
Rights Issue, this will result in a dilution of 97.6 percent of the votes and
capital in the Company, assuming full subscription.

The board of directors intends to propose to the extraordinary general meeting
on October 2, 2024, that the share capital be reduced by a total of SEK
39,000,000, from SEK 70,546,148.745931 to SEK 31,546,148.745931 (assuming full
subscription of the Rights Issue). The reduction in share capital is being
carried out to provide the Company with a more appropriate quota value.

If all warrants of series TO6 offered in the Rights Issue are fully exercised
for the subscription of new shares in the Company, the number of shares will
increase by an additional 412,423,660 shares, from 845,468,503 shares to a
total of 1,257,892,163 shares, and the share capital will increase by an
additional SEK 15,388,365.241918, from SEK 31,546,148.745931 to SEK
46,934,513.987849 (based on the share's quota value after the proposed share
capital reduction and assuming full subscription of the Rights Issue). This
corresponds to a dilution from the warrants of series TO6 of up to an
additional approximately 32.8 percent. The total dilution, in the event that
both the Rights Issue and the warrants of series TO6 are fully subscribed and
exercised, amounts to approximately 98.4 percent.

EU Growth Prospectus

Complete terms and conditions for the Rights Issue as well as other
information about the Company will be set out in the Prospectus which is
expected to be published by the Company on or about October 4, 2024.

Bridge loan

To ensure the Company's short-term working capital requirements until the
Rights Issue has been completed, the Company intends to secure a bridge loan
of approximately SEK 5.0 million.

Subscription commitments and underwriting commitments

The Company has received subscription commitments of approximately SEK 0.8
million, equivalent to approximately 1.0 percent of the Rights Issue, from the
board and management, bottom underwriting commitments of a total of
approximately SEK 23.0 million, equivalent to approximately 31.0 percent of
the Rights Issue, and middle underwriting commitments of approximately SEK
19.1 million, equivalent to approximately 25.7 percent of the Rights Issue.
Therefore, the Rights Issue is covered to approximately 57.7 percent by
subscription commitments and underwriting commitments. Bottom underwriting
commitments can be invoked if the Rights Issue is not subscribed to 32.0
percent. Middle underwriting commitments can be invoked if the Rights Issue is
not subscribed to 57.7 percent.

Compensation for bottom underwriting is fifteen (15) percent of the
underwritten amount either by cash compensation, which amounts to a maximum of
approximately SEK 3.5 million, or by compensation in newly issued units, which
corresponds to a maximum of 958,329 units. Compensation for the middle
underwriting commitments is twenty (20) percent of the underwritten amount och
is only provided in newly issued units, which corresponds to a maximum of
1,061,110 units. Underwriting compensation in newly issued shares will be
resolved upon by the board of directors based on the issue authorization
granted by the extraordinary general meeting to be held on October 2, 2024.
The subscription price for any units issued to the underwriters will
correspond to the subscription price in the Rights Issue, which is SEK 3.60
per unit or SEK 0.09 per share.

No compensation is paid for the subscription commitments. Neither the
subscription or underwriting commitments are secured by bank guarantees,
blocked funds, pledges or similar arrangements.

Exemption from the mandatory bid obligation

In connection with the Rights Issue, Buntel AB ("Buntel") has entered into an
underwriting commitment with the Company. Buntel will receive a compensation
for the underwriting commitment of twenty (20) percent of the underwritten
amount through newly issued units. The subscription price for units that are
issued to the underwriters shall correspond to the subscription price in the
Rights Issue, i.e. SEK 3.60 per unit or SEK 0.09 per share, and is intended to
be resolved upon by the board of directors based on an issue authorization in
a separate share issue by way of set-off (the "Compensation Issue").

Buntel intends to apply for an exemption from the mandatory bid obligation
from the Swedish Securities Council (Sw. Aktiemarknadsnämnden) with regard
to subscription of units made in accordance with the above-mentioned
underwriting commitment, the subscription of units in the Compensation Issue
and the exercise of the warrants of series TO6 included in the units
subscribed in accordance with the fulfillment of the underwriting commitment
(including warrants in the Compensation Issue). Such exemption will be
conditional upon the shareholders being informed prior to the extraordinary
general meeting of maximum percentage of the votes and shares that Buntel may
obtain as a result of its underwriting commitments and the exercise of
warrants of series TO6, and that the Rights Issue is approved by the
extraordinary general meeting with at least two thirds of both the votes cast
and the shares represented at the general meeting, disregarding any shares
held and represented by Buntel at the general meeting.

If the entire underwriting commitment is utilized and Buntel exercises all
warrants of series TO6 obtained in the Rights Issue and Compensation Issue,
Buntel's shareholding after the Rights Issue will amount to a maximum of
approximately 51.4 percent of the shares and votes in the Company. The
calculation is based on that no one else will exercise warrants of series TO6
for subscription of shares.

Preliminary timetable for the Rights Issue

 Extraordinary general meeting                                                October 2, 2024
 Last day of trading in the Company's shares including the right to receive   October 3, 2024
 unit rights
 First day of trading in the Company's shares excluding the right to receive  October 4, 2024
 unit rights
 Estimated date for publication of the Prospectus                             October 4, 2024
 Record date for participation in the Rights Issue                            October 7, 2024
 Subscription period in the Rights Issue                                      October 9, 2024 - October 23, 2024
 Trading with unit rights (UR)                                                October 9, 2024 - October 18, 2024
 Trading in paid subscribed units (BTU)                                       October 9, 2024 - November 11, 2024
 Preliminary date for publication of the outcome of the Rights Issue          October 25, 2024

Advisors

Mangold Fondkommission AB is financial advisor and Advokatfirman Schjødt is
legal advisor to the Company in connection with the Rights Issue.

Enquiries

 

 Tern Plc                                                       via IFC Advisory

 Ian Ritchie (Chairman)

 Allenby Capital Limited                                        Tel: 0203 328 5656

 (Nominated Adviser and Broker)

 Alex Brearley / Dan Dearden-Williams (Corporate Finance)

 Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)

 IFC Advisory                                                   Tel: 0203 934 6630

 (Financial PR and IR)

 Tim Metcalfe / Florence Chandler

 

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