DFX.L Regulatory News (DFX)

2 October 2018

Defenx PLC

("Defenx", the "Company" or the "Group")

Convertible Loan from BV Tech

Defenx Plc (AIM: DFX), the cyber-security software group, announces that it has entered into an agreement with BV Tech S.p.A. ("BV Tech"), the Company's majority shareholder, pursuant to which BV Tech will provide the Company with a unsecured loan of €950,000, which is convertible into new ordinary shares of 1.8 pence each in the Company ("Ordinary Shares") at 8 pence per new Ordinary Share (the "Conversion Price") (the "Convertible Loan").

The Convertible Loan replaces in full the unsecured loan of €950,000 provided by BV Tech announced on 1 October 2018, which has now been terminated with immediate effect.

The Convertible Loan, will incur an interest rate of 6% per annum, payable quarterly in arrears, and any balance of the Convertible Loan and accrued interest that remains outstanding as at 1 January 2020 will be repayable in full (the balance may be repaid earlier at the Company's election). The Convertible Loan will, at the sole discretion of BV Tech, be convertible into new Ordinary Shares at the Conversion Price.

Under the terms of the Convertible Loan, €150,000 can be drawn down immediately, with the remainder being available to be drawn down in full, or in part, 45 days from 1 October 2018. It is intended that the proceeds of the Convertible Loan will be used for general corporate purposes.

For illustrative purposes only (and based upon the exchange rate of 1 October 2018), if the Company were to draw the Convertible Loan in full and BV Tech was to request the immediate conversion of the Convertible Loan, 10,576,238 new Ordinary Shares would be issued to BV Tech, equivalent to 27.3% of the Company's then enlarged share capital. When included with its current shareholding in the Company, BV Tech would, as a result be interested in 25,989,764 Ordinary Shares, representing approximately 67.1% of the Company's then enlarged issued share capital.

The conversion of the Convertible Loan is conditional on the relevant resolutions being approved at the Company's upcoming annual general meeting ("AGM") due to be held on 31 October 2018. The Company has received irrevocable undertakings from BV Tech and Andrea Stecconi (including North Investment SA, a company in which Mr Stecconi is interested) to vote in favour of all the resolutions at the AGM, which together represents approximately 61.2% of the Company's current issued share capital.

If the relevant resolutions are not approved at the AGM, the Company will be unable to issue the new Ordinary Shares on conversion of the Convertible Loan, on a non pre-emptive basis. In such circumstances, the Company has agreed to either: i) seek to undertake a pre-emptive offering of new Ordinary Shares to all shareholders to raise not less than €950,000; or ii) such other form of equity raising as may be agreed with BV Tech. In such an instance, BV Tech has irrevocably undertaken to subscribe for its pro-rata entitlement together with any shares not subscribed for by other shareholders up to a maximum aggregate amount of €950,000 and, at BV Tech's sole discretion, it may require the Company to apply all or part of the Convertible Loan, plus accrued interest, then outstanding, as payment towards its subscription pursuant to the pre-emptive offering. If BV Tech does not require the Company to apply such amounts outstanding towards its subscription, all or part of any of the Convertible Loan, plus accrued interest, then outstanding shall be immediately repayable in cash by the Company.

Pursuant to the terms of the £1.25 million 10% secured convertible bonds issued by the Company pursuant to a bond instrument dated 31 August 2017, the bond conversion price (at which the bonds may be converted into new Ordinary Shares) is subject to adjustment upon entry into the Convertible Loan. As announced on 6 April 2018, the original bond conversion price of £2.00 was adjusted to £1.81 and the number of new Ordinary Shares to be issued on full conversion of the bond was adjusted from 625,000 to 691,371. Following entry into the Convertible Loan, the bond conversion price £1.81 has been adjusted to £1.63 and the number of new Ordinary Shares to be issued on full conversion of the bond has been adjusted from 691,371 to 766,871.

As BV Tech is a substantial shareholder of the Company as defined in the AIM Rules for Companies ("AIM Rules"), the Convertible Loan is classified as a related party transaction pursuant to AIM Rule 13. Accordingly, the independent Directors of the Company (being all the Directors other than Raffaele Boccardo who is a director of and interested in BV Tech), having consulted with the Company's Nominated Adviser, Strand Hanson Limited, consider that the terms of the Convertible Loan are fair and reasonable insofar as the Company's shareholders are concerned.

Enquiries

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

investors.defenx.com