T42 Iot Track. Regulatory News (TRAC)

26 July 2023

t42 IoT Tracking Solutions plc

T42 raises $1.3M through a convertible loan from a strategic customer

t42 IoT Tracking Solutions plc (AIM: TRAC) ("t42" or the "Company") is pleased to announce that it has raised $1.3m (before expenses) to support both existing orders and the Company's new lease-based order strategy and to repay certain existing loans. The funding is in the form of a secured convertible loan ("Loan") provided to t42 Limited by Ewave Mobile Ltd.) ("Lender"), an international group providing solutions across a range of sectors, including supply chain management. Companies within Lender's group have been long-time key customers of t42 in the supply chain market.

The Loan, which carries interest at 10% per annum, payable quarterly on the principal drawn, will be drawn down as to $600,000 immediately, $300,000 in three equal tranches during August 2023, and the balance of $300,000 by 30 September 2023.

The Company will apply approximately $0.55 million of the Loan to repay in full the outstanding loan from CSS Alpha Global Pte Ltd ("CSS"), together with interest accrued, which was announced on 15 December 2022 and carried a substantially higher interest rate compared to the new Loan.

The remaining funds from the Loan are anticipated to assist the Company in advancing several pending orders by supporting the upfront payment to suppliers and the new financing leasing structure for other existing orders, and to support taking advantage of the expected growth in business opportunities during 2023.

The Loan, together with accrued interest at the time of conversion, may be converted, at the discretion of the Lender, at any time prior to the Loan repayment date of 20 January 2025, into such number of new t42 ordinary shares as corresponds to 29.5% of the Company's issued ordinary share capital immediately following such conversion. The Loan may be converted in part, on a pro rata basis to the above terms.

Based on the Company's current issued share capital, being 54,026,822 ordinary shares, and prevailing exchange rates, the conversion rate corresponds to approximately 4.46p per new t42 ordinary share and full conversion would result in the issue of 22,606,968 shares.

For so long as (i) the Loan is outstanding, or (ii) the Lender holds 15% or more of the Company's issued ordinary shares, the Lender shall have the right to appoint a director or observer to the t42 Board. The appointment of such director shall be subject to completion of customary satisfactory regulatory due diligence by the Company's nominated adviser.

Security is provided by way of parent guarantee and charges over the assets of t42. The Loan agreement includes anti-dilution provisions to protect the equity interest percentage of the Lender, so that in the event of the exercise or conversion of existing warrants, options or other instruments convertible into new t42 ordinary shares (subject to certain exceptions), the Lender will be issued for no additional consideration such number of t42 shares such that, together with the t42 shares already held, the Lender's percentage shareholding shall remain the same. Under these provisions, a maximum of 9,061,870 additional new shares would be issued to the Lender, assuming full exercise or conversion of existing warrants, options and convertible securities (save for a limited number of dilutive instruments excluded from this calculation).

In the event the Loan is converted and the Lender's resultant shareholding exceeds 20% of the Company's issued ordinary share capital, the Lender shall enter into a relationship agreement with the Company and its Nominated Adviser on customary terms. 

Confirmation of Total Voting Rights

The Company notes that the 3 million Deposit Shares, as detailed in the announcement of 15 December 2022, are now not being issued to CSS. Therefore, as of the date hereof there are 54,026,822 ordinary shares in issue, each with one voting right. The Company does not hold any ordinary shares in treasury. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Avi Hartmann, CEO of t42, commented: "We have full confidence in our new lease-based business model, which we believe will help us grow and expand our business even further. The funds raised will enable us to deliver new orders to our customers more efficiently and enhance our service quality. We look forward to increased commercial cooperation between the parties in line with our common strategies."

Contacts:

Notes to Editors

t42 IoT Tracking Solutions plc (AIM: TRAC), formerly Starcom Systems plc, provides real-time tracking, analysis, monitoring, and security IoT solutions for the global container and freight market and covers 55 countries, over 100 distributors, and 50 logistics and support partners.

t42's multi-sensor IoT tracking devices use a wide range of detection capabilities with cloud-based analytics and alerts, with real-time data transmission, analysis, and actionable insights. Its devices are used by ports, cargo owners, shipping companies, freight forwarders, insurance companies, customs authorities, homeland security, and police for end-to-end global container tracking and digital transformation of shipments.

For more information on the Company, please visit: www.t42.co.uk/. 

The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.