Tern Regulatory News (TERN)

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.

28 January 2021

Tern Plc

("Tern" or the "Company")

Wyld Networks Fundraise and Update

Tern Plc (AIM:TERN), the investment company specialising in the Internet of Things ("IoT"), is pleased to announce that its portfolio company, Wyld Networks Limited ("Wyld Networks") has completed a £750,000 equity fund raise (the "Fund Raise"), including £600,000 from the same third-party institutional investor who previously subscribed for £400,000 of convertible loan notes in Wyld Networks as announced on 7 May 2020 (the "Investor"), at a significant valuation uplift from the previous book valuation of Tern's holding and a capital reorganisation.

Highlights

· £600,000 invested by a third-party Investor in Wyld Networks' equity

· Tern has invested a further £150,000 in Wyld Networks' equity

· Simplified Wyld Networks' capital structure with all outstanding secured convertible loan notes held by Tern and the Investor converted into Wyld Networks' equity

· Tern's holding in Wyld Networks equity is now 78.7%

· Book valuation of Tern's holding in Wyld Networks, valued at the Fund Raise valuation, increases from £1.2 million to £4.1 million

· Wyld Networks has made further recent progress, including signing a contract with Wezen Group in Latin America as one of its partners in the phase 1 testing of the Wyld Connect Satellite IoT solution

Wyld Networks Valuation and Capital Structure

Wyld Networks markets a portfolio of Internet of Things ("IoT") solutions with broad application in multiple sectors, leveraging its patent pending technology. Prior to the Fund Raise, Tern had a holding of 96.74% in Wyld Networks and as at 30 June 2020, the date of Tern's last published book valuation, this holding had a book valuation of £1.2 million, which included a convertible loan balance of £1.1 million.

Post the Fund Raise, Tern's holding in Wyld Networks is reduced to 78.7% (before any dilution on exercise of any future options), but this holding now has an increased book valuation of £4.1 million. To date Tern has invested approximately £1.5 million in Wyld Networks (including a further £160,000 in convertible loan notes since 30 June 2020) and this revised book valuation represents approximately 2.7 times the amount invested by Tern to date.

The capital structure of Wyld Networks has also been simplified, with all of the outstanding Wyld Networks secured convertible loan notes held by Tern and the Investor converted into equity. Wyld Networks is now valued in total at approximately £5.2 million at the Fund Raise price and is held 78.7% by Tern, 19.8% by the Investor and 1.5% by its management and other shareholders. In addition, it is anticipated that Wyld Network's management and employees, which for these purposes does not include any Tern director, will have options over up to 14% of Wyld Network's fully diluted equity.

At the time of the original investment by the Investor in May 2020, the Investor had an option to convert its convertible loan notes in Wyld Network into ordinary shares in Tern at a 15% discount to the five-day average closing price of Tern shares on AIM immediately prior to 7 May 2021, if a conversion event had not occurred before that date. As a result of the Fund Raise and the conversion of all the convertible loan notes in Wyld Networks, this option has now lapsed.

Wyld Networks Update

Further to the Company's portfolio update, announced on 12 January 2021, the positive momentum has continued for Wyld Networks.

In addition to the previously announced contract with Alliance Corporation covering the North American region, Wyld Networks has recently signed a contract with Wezen Group in Latin America, as one of its partners in the phase 1 testing of its Wyld Connect Satellite IoT solution.

Wyld Networks believes the Wyld Connect Satellite IoT solution, when coupled with its satellite partner's proposed deployment of a low earth orbiting satellite constellation to provide global coverage, can play a significant part in enabling data connectivity in remote areas. According to McKinsey & Company*, agriculture is in the early days of yet another revolution, at the heart of which lie data and connectivity. Artificial intelligence, analytics, connected sensors, and other emerging technologies could further increase yields, improve the efficiency of water and other inputs, and build sustainability and resilience across crop cultivation and animal husbandry. However without a solid connectivity infrastructure, none of this is going to be possible. According to McKinsey, if connectivity is implemented successfully in agriculture, the industry could add US$500 billion in additional value to global gross domestic product by 2030, with Latin America alone representing US$64 billion.

Wyld Networks is also pleased to report that Ascom's plans to launch Wyld Mesh and Wyld Connect into the enterprise market, consisting of retail, hospitality and other venues, are being executed as anticipated by Wyld Networks' management.

* https://www.mckinsey.com/industries/agriculture/our-insights/agricultures-connected-future-how-technology-can-yield-new-growth

Commenting Al Sisto, CEO of Tern, said:

"We are delighted that Wyld Networks has secured this third-party funding to assist it with the next stage of its development, which has been secured at a significant valuation uplift from the previous carrying value of our holding. It is a good demonstration of our model where we look for external investors to join us on the journey with our portfolio companies at incrementally higher values, prior to ultimately exiting at hopefully a significantly higher value still.

"We believe Wyld Networks is very well positioned for the future and we look forward to providing further regular updates on both Wyld Networks and our other portfolio companies."

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