Tern Plc : Statement re Issue of Convertible Unsecured Loan

30 November 2017

Tern Plc (AIM: TERN) Issue of Convertible Unsecured Loan Notes; and Loan to Device Authority

Tern Plc (the "Company"), the investment company specialising in the Internet of Things ("IoT"), is pleased to announce that it has agreed a Convertible Unsecured Loan Note facility of up to £2.2 million ("CULN").

The CULNs will be issued in principal amounts of £25,000 and aggregated into four tranches (the "Tranches"), with the first £550,000 (before expenses) , committed.  The remaining three tranches will be made in equal amounts every 60 calendar days, unless requested earlier or later by Tern, and approved by the issuer of the CULNs.

The CULNs are convertible at any time before the maturity date, being the third anniversary of the relevant issue of the CULNs at the lesser of : a) 125% of the closing mid-price one trading day before the date of any Issue; or b) the lowest closing bid price from the three previous trading days prior to notice of conversion being served.  The CULNs shall not bear interest.   In certain events of default or a change of control, a redemption of up to a maximum of 120 per cent. would be payable.  The Company can redeem at any time one or more CULNs at a price equal to 105 per cent. of the CULNs.

The Company will allocate funds towards maintaining its current position in its portfolio companies, to build and grow the pipeline of investment opportunities and for general working capital. 

Loan to Device Authority

Tern also announces that Device Authority ("DA") has received $300,000 convertible secured loan (the "DA Loan") from a maximum of $323,330 provided by its shareholders in support of the fund raising, of which Tern has contributed $150,751.   

The DA Loan accrues an interest coupon of 10% and is convertible automatically on an equity fundraising in DA of at least USD $2.5 million which completes before 31 March 2018 (a "Qualifying Fundraising"), into the most senior class of shares issued on the Qualifying Fundraising at a 20% discount to the fundraising price per DA share.  If the Qualifying Fundraising is not completed by 31 March 2018, the DA Loan is, at the election of the providers of the loan, redeemable immediately or convertible into Class A Preference Shares of DA at a price of $0.47 per share. 

Providers of the DA Loan will receive warrants to subscribe for DA shares exercisable at any time within five years of provision of the loan. If a Qualifying Fundraising is completed before 31 March 2018 then the warrants allow the providers of the loan to subscribe for the most senior class of shares issued on the Qualifying Fundraising at a 20% discount to the fundraising price per share. Otherwise, the warrants allow the providers of the loan to subscribe for Class A Preference Shares of DA at an exercise price of $0.60 per share. The maximum number of shares for which the providers of the DA Loan can subscribe is equal to the amount of the loan provided by them divided by the relevant exercise price.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

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