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Pin to quick picksTern Regulatory News (TERN)

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Notice of General Meeting

31 Aug 2023 07:00

RNS Number : 8575K
Tern PLC
31 August 2023
 

31 August 2023

Tern Plc

("Tern" or the "Company")

Notice of General Meeting

Confirmation of Board and Management Changes

Tern Plc (AIM: TERN), the company focused on value creation from Internet of Things ("IoT") technology businesses, announces that it will today send a circular to the Company's shareholders containing a notice convening a general meeting of the Company which is to be held at 9.00 a.m. on 26 September 2023 at the offices of Reed Smith, The Broadgate Tower, 20 Primrose Street, London EC2A 2RS (the "General Meeting"). The circular will be available shortly on the Company's website at https://www.ternplc.com/aim-rule-26.

The resolutions to be proposed at the General Meeting (the "Resolutions") are to grant authority to the directors of the Company (the "Directors") to issue new ordinary shares of 0.02p in the capital of the Company ("Ordinary Shares") and the disapplication of pre-emption rights in relation to such an issue of new Ordinary Shares. Following consultation with a number of the Company's larger shareholders and feedback kindly submitted by others, the resolutions have been revised to permit a lower number of new Ordinary Shares to be authorised for potential issue by the Directors than was sought in the resolutions which were proposed at the Company's Annual General Meeting held on 29 June 2023 (the "2023 AGM").

Background and reasons for the Resolutions

At the 2023 AGM, resolutions to grant the Directors the authority to allot securities and to grant the Directors the authority to issue new Ordinary Shares for cash did not achieve the requisite number of votes to be passed. Following the failure to pass these resolutions at the 2023 AGM, the Directors do not currently have the authority to issue any new Ordinary Shares for cash or generally.

The Directors believe that having the authority to issue new Ordinary Shares is important for an investment company such as Tern as it:

· provides the Company with the flexibility to raise, or have access to, funding to support its portfolio companies, as required, where such funding:

o gives the Company negotiating leverage when dealing with potential third-party investors in discussions regarding the funding of Tern's portfolio companies; and

o enables the Company to participate, potentially at short notice, in potential fundraisings by its portfolio companies. If this is not possible, the Company could find that either, or both, its shareholdings in its portfolio companies are diluted and their valuation reduces, which may then adversely impact upon the Company; and

· in particular, having the ability to issue new Ordinary Shares would enable the Company to potentially access the remaining £2.5 million of the £3.0 million loan facility (the "Facility") entered into on 12 June 2023, which requires warrants over Ordinary Shares to be issued in relation to any drawdown under the Facility. The Directors' current preference is that the Company's funding requirements are satisfied through seeking further drawdowns under the Facility rather than seeking to raise funds via the issue of new Ordinary Shares or disposing of portfolio holdings at a time that they believe may not be in the best interests of the Company and its shareholders. Without the Directors having the authority to issue Ordinary Shares and to disapply pre-emption rights the Company is unable to make any further drawdowns from the Facility.

The Resolutions would permit the Directors to issue up to 37,500,000 new Ordinary Shares (representing approximately 9.6 per cent. of the Company's existing issued ordinary share capital) generally and for cash whilst dis-applying the pre-emption rights of existing shareholders in relation to such an issue.

As announced on 10 August 2023, following the 2023 AGM, the Company has made a number of management changes, including to the Board of the Company and the Company's management structure that are overall expected to save approximately 40% of the Company's overall central costs in 2024, when compared to the level for 2022. This Board and management restructuring is intended to provide an appropriate governance and management structure for the Company, at significantly reduced cost, as the Company seeks to realise value from its portfolio of IoT technology businesses. It is the Board's intention that the Company will not invest in any companies or entities not already part of Tern's existing portfolio until such time as the Company has realised material value from its current portfolio companies.

However, should the Resolutions not be passed the Company will likely be required to seek to satisfy its further funding requirements from the disposal of holdings in its portfolio in the short-term and in a timeframe and potentially in a manner that may not be in the best interests of the Company and its shareholders. In these circumstances the Directors believe that the Company may also suffer greater dilution of its remaining portfolio holdings than if the Company was able to drawdown further on the Facility or had access to potential funding through the issue of new Ordinary Shares. The Directors believe that failure to pass the Resolutions will likely therefore result in a lower value being ultimately achieved for the Company's shareholders than if they are passed.

Confirmation of Board and management changes

Further to the announcement made by the Company on 10 August 2023 detailing a Board and management restructuring, the Company can confirm that Matthew Scherba has, as anticipated, now transitioned to the full time Chief Executive Officer position at InVMA Limited, trading as Konektio, a Tern portfolio company, and has therefore left Tern's employment.

Sarah Payne will step down as the Company's Chief Financial Officer and Company Secretary on 15 September 2023 to take up a position with another company, but will remain on the Board as a Non-Executive Director, as previously announced. The Company has appointed a part-time Chief Financial Officer, a non-Board position, and will be outsourcing the Company Secretary function.

 

Enquiries:

Tern Plc

Ian Ritchie (Chairman)

via IFC Advisory

 

Allenby Capital Limited

(Nominated Adviser and Broker)

Alex Brearley / Nick Naylor / Dan Dearden-Williams (Corporate Finance)

Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)

 

Tel: 0203 328 5656

 

IFC Advisory

(Financial PR and IR)

Tim Metcalfe

Graham Herring

Florence Chandler

 

Tel: 0203 934 6630

tern@investor-focus.co.uk

 

 

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