Tern Plc : Statement re Issue of Loan to Device Authority

28 December 2017

Tern Plc (AIM: TERN)
Issue of Loan to Device Authority

Tern Plc (the "Company"), the investment company specialising in the Internet of Things ("IoT"), announces that its portfolio company, Device Authority ("DA"), in which Tern has a 56.8% investment, has received commitment for a convertible secured loan (the "DA Loan") of up to $1,688,684 from DA's existing shareholders, including Tern.

Tern has committed to contributing up to $721,162 to the DA Loan, which will be provided in two tranches. 50% of the total loan, which will see Tern contribute $360,581, will be payable by 16 January 2018, at which time Tern's total convertible loan note position will be $511,332. The remaining 50% will be payable on 28 February 2018 if a qualified investment of at least USD$2.5 million has not been secured by DA at that time.

Given the progress DA continues to make in terms of fulfilling its strategy to increase sales by bringing its IoT security platform to market via partnerships with leading IoT ecosystem providers, DA's shareholders have agreed to support DA as it focuses on maintaining the solid momentum delivered to date.

The DA Loan accrues an interest coupon of 5% and is convertible automatically on an equity fundraising in DA of at least USD$2.5 million which completes before 30 June 2018 (a "Qualifying Fundraising"), into the most senior class of shares issued on the Qualified Fundraising at the lowest fundraising price per share.  If the Qualifying Fundraising is not completed before 30 June 2018, but DA is able to procure an exit, the providers of the loan can elect either to receive 300% of the principal amount of the loan notes held by them, or to convert the loan and accrued interest into Class A Preference Shares of DA at a conversion price of £0.036681585 per share. 

Providers of the DA Loan shall also be issued 2.6 warrants ("Warrants") for each $1 of Loan Notes subscribed for by them (rounded down to the nearest whole number). The Warrants shall have a term of seven years and be exercisable from the earlier of (i) immediately prior to an exit; (ii) immediately following completion of a Qualifying Fundraising; or (iii) immediately following completion of the Second Tranche and give each warrant holder the right to subscribe for one Class A Preference Share of DA for each Warrant held by them at an exercise price of £0.036681585 per share.

Al Sisto, CEO of Tern, said:
"DA has done an excellent job of driving its IoT security platform, KeyScaler, to be recognised as a leading IoT access control product, as evidenced in the December issue of SC Magazine.  Our enthusiasm and support for DA is shared by all of its shareholders as demonstrated in their decision to participate in this convertible note."

Shareholder Briefing
Tern will be arranging a shareholder telephone briefing in January and looks forward to updating its shareholders on the progress being made by your company. A further announcement will be made in early January with the details.

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

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