Tern Regulatory News (TERN)

16 October 2013

Tern Plc

(AIM: TERN)

 Business update, Proposed Capital Reorganisation and new Articles

Tern Plc ("the Company"), the AIM-quoted investment company focussed on the fast changing IT sector, is pleased to announce a business update and capital reorganisation:

Business Update

The Company is in the final stages of making its first investment in addition to other investment opportunities which are at various stages of investigation. The Board is very pleased with the quantity and quality of the proposals received.

Over the past two months many of the outstanding legacy issues have been resolved. However, two require the approval of shareholders and therefore the Company is convening a General Meeting to approve a share consolidation and subdivision alongside the adoption of new articles, the reasons for which are described below.

The resolution of legacy issues will allow the directors to concentrate on building the Company and creating value for shareholders.

Share consolidation and subdivision

Tern plc has distributed a Circular to shareholders convening a General Meeting ("GM") for 1 November 2013.

At close of business on 14 October 2013, the latest practical date prior to publication of the Circular, the Company had 478 Shareholders of which 351 had a shareholding of less than 1,000 shares. These 351 Shareholders account for 73.4 per cent. of the Shareholders by number, but represent less than 0.0155% per cent. of the total number of Existing Ordinary Shares.

At the closing bid price of 0.235p on 14 October 2013, the latest practical date prior to the publication of the Circular, the market value of 1,000 shares would be £2.35. The Directors consider that should a shareholder with 1,000 shares or less choose to sell their shares, the proceeds will be significantly reduced or even completely eliminated by the dealing costs of selling. Therefore the Directors recognise that for small Shareholders it is uneconomic for them to dispose of their shares.

Capital Reorganisation

Under the Capital Reorganisation, the Existing Ordinary Shares will be consolidated into New Consolidated Ordinary Shares on the basis of one New Consolidated Ordinary Share for each 1,000 Existing Ordinary Shares. Each New Consolidated Ordinary Share will then be sub-divided into 50 New Ordinary Shares.

The rights attaching to the New Ordinary Shares will be pari passu in all respects to those of the Existing Ordinary Shares.

Existing share certificates will cease to be valid following the Capital Reorganisation. New share certificates in respect of the New Ordinary Shares will be issued by 11 November 2013.

A CREST Shareholder will have their CREST account credited with their New Ordinary Shares following their Admission, which is expected to be on 4 November 2013.

The notice of GM set out in the circular contains resolutions to give effect to the proposed Capital Reorganisation. The Capital Reorganisation is conditional upon the approval of the Shareholders at the GM.

Fractional Entitlements

Many Shareholders will not hold at the Record Date a number of Existing Ordinary Shares that is exactly divisible by the consolidation ratio. The result of the Consolidation, if approved, will be that such Shareholders will be left with a fractional entitlement to a resulting new Ordinary Share.

Holders of fewer than 1,000 Existing Ordinary Shares would not be entitled to receive New Ordinary Shares under the Consolidation. Shareholders with a holding of Existing Ordinary Shares which is greater than 1,000 but which is not exactly divisible by 1,000 would have their entitlement rounded down to the nearest whole thousand. Any fractions arising as a result of the Consolidation will be aggregated and sold for the best price reasonably obtainable, and the net proceeds of the sale distributed among such Shareholders unless the Directors consider that the cost of distribution would, in the reasonable opinion of the Board, be disproportionate to the amounts involved.

The Directors have decided that the costs of distributing any amounts less than £3 would be disproportionate to the amounts being distributed. Based on the current price of Existing Ordinary Shares, the maximum value of any fractional entitlement will be less than £2.35. Therefore, all proceeds of the sale of fractional entitlement arising as a consequence of the Capital Reorganisation will be sold for the benefit of the Company.

Adoption of Articles

The Directors have decided, subject to shareholders' approval, to adopt new articles which shall replace the existing articles of association. The new articles of association are updated in accordance with the Companies Act 2006 and are available for viewing on the Company's website, www.silvermere-energy.com.

The Definitions which apply in the Circular have been used in this announcement.