This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

7 May 2020

Tern Plc ("Tern" or the "Company")

Wyld Networks Limited issues of £400,000 of Convertible Loan Notes to third party

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"), has secured £400,000 from an investor to fund its growing pipeline of opportunities and for general working capital purposes, by way of an unsecured Convertible Loan Note facility ("CLN"). The CLN has been issued in full. The CLN also includes an option to convert into Tern shares under certain circumstances.

Tern's CEO, Al Sisto, said:

"Wyld has gone from strength to strength over the past 12 months and this external investment is a huge vote of confidence in Wyld's management team, which has transformed this start up business and its pipeline in a very short space of time. This external investment is from an investor who is seeking exposure to the mid- to long-term growth opportunities presented by IoT innovation and to have received its additional support early in the development of Wyld is very validating. With contracts signed to provide IoT solutions, a cooperation agreement with one of the world's largest satellite operators secured and its technology now patent pending, Wyld has reached an important point in its development. These funds will enable Wyld to continue on this upward trajectory towards the goal of securing a syndicated Series A funding round in due course."

The CLN, which bears interest at 5% per annum, is convertible into Wyld shares, at the option of the investor ("CLN Holder"), at either 25%, 50%, 75% or 100% of the principal of the CLN, on completion of an exit or Wyld equity fundraise of at least £1 million from a third party (in both cases) other than Tern before 6 May 2021 (the "Maturity Date"). This conversion would take place at a 20% discount to the Wyld equity fundraise price or the exit price per Wyld share.

Following a conversion event, any amount of the CLN not converted into Wyld shares will automatically be converted into fully paid ordinary shares of 0.02 p each in the capital of Tern ("Tern Shares") at a 15% discount to the market price of Tern Shares on AIM at market close on the date of the conversion event.   

If a conversion event has not occurred by the Maturity Date, then the CLN Holder has the option to elect to convert all of the CLN into Tern Shares at a 15% discount to the five-day average closing price of Tern Shares on AIM immediately prior to the Maturity Date, or, failing such election, the maturity date of the CLN is to be extended for one further year ("the Second Maturity Date"). If a Conversion Event has not taken place by the Second Maturity Date, the CLN will automatically convert into fully paid Tern Shares at a 15% discount to the five-day average closing price of Tern Shares on AIM immediately prior to the Second Maturity Date. 

Under the terms of the CLN, the CLN Holder has to enter into an orderly market deed ("the Orderly Market Deed") before any issue of Tern Shares can be effected.  Under the Orderly Market Deed, the CLN Holder would undertake (subject to customary carve-outs from such restrictions):

1. not to dispose of any interests in such Tern Shares issued and allotted following a Conversion Event for a period of one month following such Conversion Event;
2. not to dispose of any interests in 50% of all such Tern Shares issued and allotted following a Conversion Event for a period of three-months following such Conversion Event;
3. following expiry of the period referred to in paragraph (b), up to the date that is six months following such Conversion Event, not to dispose of any interests in any remaining Tern Shares issued and allotted following such Conversion Event, other than through Tern's nominated adviser (or any nominated adviser or broker appointed to act for Tern in place of the nominated adviser) subject to the terms relating to the price and execution offered by the nominated adviser being materially no less favourable than other brokers at that time; and
4. to use all reasonable endeavours to ensure that its associates comply with the restrictions contained in such undertaking.

The CLN is not transferable other than with the prior consent of Wyld and Tern and is subject to customary terms and conditions for such an instrument.

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