REG - Tern PLC - Strategic Update

TernAnnouncement

21/07/2022 13:45

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RNS Number : 3395T  Tern PLC  21 July 2022

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.

 

21 July 2022

 

Tern Plc

("Tern" or the "Company")

 

Strategic Update

 

Tern Plc (AIM:TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, is providing an update on the Company's
strategy following the termination of its proposed acquisition of Pires
Investments plc ("Pires"), announced earlier today.

 

The board of Tern (the "Board") believes that the last two years have been
pivotal for all of Tern's network of companies* and believes that they are all
now well positioned for the future.

 

Tern has, with its hands-on approach, supported the growth of its companies
from their early start-up days to now, alongside validation from independent
third-party investors, who invested after conducting thorough due diligence.
 The Board believes that these third-party investments demonstrate confidence
in the companies' management teams, business models, market focus and future
prospects.  These actions in the past eighteen months have resulted in
uplifts in their carried values for our shareholders, delivered important
investors to help them achieve market relevance and have enabled them to gain
important commercial traction and grow their monthly recurring revenues
("MRR").

 

Whilst the Board believes that all of the companies in Tern's network are
capable of further value enhancing growth under Tern's stewardship, the Board
recognises the views expressed by a segment of the Company's shareholders who
wish to see further demonstrations of the ability of the Tern business model
to crystalise value for shareholders, specifically through the exit of an
existing holding before further companies are added to the network of
companies.

 

July 2021 saw the first IPO of one of Tern's companies, Wyld Networks AB, on
the NASDAQ First North Growth Market in Stockholm, transforming Tern's holding
from one of a venture investor to an institutional investor.  The public
quotation of Wyld Networks now provides Tern with access to capital and
ultimately a route to exit its participation at the appropriate time, to
further maximise value for Tern shareholders.  However, the Board believes
that Wyld Networks has significant future potential and that a sizable
reduction in Tern's holding would not be in shareholders' or the Company's
best interests at the present time.

 

The Board is therefore reviewing all of Tern's other holdings with a target to
achieve a realisation of one or more of the Company's participations as soon
as economically prudent and feasible.  Whilst there can be no guarantee that
buyers will be available at an appropriate price for any of Tern's holdings,
particularly given the current financial market conditions, the Board is
focused on achieving this target as soon as it is appropriate and realistic in
the Board's view.

 

The Board also recognises both the desire to protect Tern's current positions
in its network of companies and the limited appetite of some shareholders to
see further companies added to Tern's network, at least until one or more
exits have been achieved.  Therefore, the Board's current intention is not to
add any new companies to the Tern network of companies, other than to meet any
commitment the Company may have in relation to the Sure Valley Ventures UK
Software Technology Fund, until it has received a capital return from an exit
of one of its current investments.

 

However, it is important to note that Tern's companies are all in an MRR
growth phase and may require further funding if they are to realise their full
potential and deliver appropriate returns to all their shareholders, including
Tern and its shareholders.  Funding therefore may be required ahead of the
receipt of any exit proceeds and in that event the Board will seek to explore
all the funding sources and options available to the Company, together with
the appropriateness of participating in any capital raise being undertaken by
one of Tern's companies, in order to protect the gains and value creation
already achieved for Tern's shareholders and to ensure the Company is able to
negotiate from a position of strength.

 

The focus, therefore, at least in the short to medium term, will be on Tern's
existing companies and the Company's existing significant pipeline of exciting
and disruptive potential investment opportunities will be put on hold at the
present time.  In light of this, the Board will also be assessing its
structure to ensure that it is configured to best meet the Company's and its
network of companies' immediate needs.

 

Further announcements will be made in due course, as appropriate.

 

*Tern's "network of companies" or "Tern's companies" comprise: Device
Authority Limited, Wyld Networks AB, InVMA Limited (trading as Konektio),
FVRVS Limited (Trading as FundamentalVR) and Talking Medicines Limited, which
are companies that Tern has interests in, together with Tern's holding in the
Sure Valley Ventures UK Software Technology Fund.

Commenting Al Sisto, CEO of Tern, said:

 

"As was outlined in the various transaction announcements and the circular to
Tern shareholders, we believed that the acquisition of Pires could have
delivered substantial benefits to Tern shareholders.  Therefore, whilst it is
disappointing that the acquisition of Pires has not proceeded, we are
determined to continue to execute our strategy and maximise value for Tern
shareholders, both in the short and long term.

 

"Tern's companies have all made important progress in the last eighteen
months, despite the pandemic, and we recognise the desire of many shareholders
to see this demonstrated through an exit.  We will therefore be carefully
evaluating how best this may be achieved, whilst continuing to improve those
in our network of companies that we believe have the potential to deliver
significantly higher returns to their shareholders, including Tern and its
shareholders.

 

"The Board remains fully focussed on continuing to maximise 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

 

 

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