Open Offer and Notice of General Meeting

Tern Plc (AIM:TERN), the company focused on value creation from Internet of Things ("IoT") technology businesses, announces an Open Offer to raise up to £600,972 (before expenses) through the issue of up to 48,077,813 Open Offer Shares at an Issue Price of 1.25p per Open Offer Share.

1 Open Offer Share for every 9 Ordinary Shares held on the Record Date.

The Issue Price of 1.25p per Open Offer Share represents a discount of approximately 13.8 per cent. to the closing middle market price of 1.45p for each Ordinary Share on 4 September 2024 (the latest practicable date prior to this announcement).

The Open Offer is only conditional upon the admission of the Open Offer Shares to trading on AIM. It is expected that Admission will become effective and dealings in the Open Offer Shares will commence on 24 September 2024.

The Open Offer is open for acceptance from now until 20 September 2024. Details of the Open Offer will be set out in a Circular to be sent to shareholders later today. The Circular sets out the reasons for and further details of the Open Offer, including its terms and conditions and risk factors.

Notice of General Meeting

Additionally, as a separate matter, the Company is today posting to its shareholders a further circular (the "General Meeting Circular") convening a general meeting of the Company which is to be held at 9.30 a.m. BST on 23 September 2024 at the offices of Allenby Capital, 5 St Helen's Place, London, EC3A 6AB (the "General Meeting").

The resolutions ("Resolutions") to be proposed at the General Meeting are to grant authority to the directors of the Company to issue new ordinary shares and to disapply pre-emption rights in relation to the issue of a proportion of these ordinary shares. The following resolutions will be proposed at the General Meeting:

• Resolution 1, which will be proposed as an ordinary resolution, is to authorise the Directors to allot and grant rights to subscribe for, or convert any security into, Ordinary Shares up to a total nominal value of £30,000 (representing a total of up to 150,000,000 new Ordinary Shares); and
• Resolution 2, which will be proposed as a special resolution and which is subject to the passing of resolution 1, is to disapply statutory pre-emption rights, provided that such authority shall be limited to an aggregate nominal value of £20,000 (representing a total of up to 100,000,000 new Ordinary Shares).

Extracts from the General Meeting Circular regarding the Background and reasons for the Resolutions are set out below in Appendix 2. Shareholders should read the whole of the General Meeting Circular and not rely solely on the summary information presented in this announcement.

The General Meeting Circular will be posted to shareholders today and a copy of the General Meeting Circular will shortly be available from the Company's website: https://www.ternplc.com/investors

Notes:

• References to times in this Document are to London time (unless otherwise stated).

Open Offer statistics

Notes:

* assumes full take up of the 48,077,813 Open Offer Shares

Please refer to Appendix 1 below for further information

Appendix 1

Introduction

The Company is proposing to raise up to approximately £600,972 pursuant to the Open Offer. The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate by subscribing for Open Offer Shares at the Issue Price of 1.25 pence per Ordinary Share, pro rata to their holdings of Existing Ordinary Shares.

Background to and reasons for the Open Offer

At the Company's 2024 Annual General Meeting held on 27 June 2024 (the "2024 AGM") the resolution to grant the Directors the authority to issue new Ordinary Shares for cash on a non-preemptive basis did not achieve the requisite number of votes to be passed. Following the failure to pass this resolution at the 2024 AGM, the Directors do not have the authority to issue new Ordinary Shares for cash on a non-preemptive basis, nor the ability for the Company to potentially access the remaining £2.5 million of the £3.0 million loan facility (the "Facility"), details of which were announced by the Company on 12 June 2023, which, among other things, requires warrants over Ordinary Shares to be issued in relation to any Facility drawdown. Without the Directors having the authority to disapply pre-emption rights on an issue of Ordinary Shares, the Company is unable to make any further drawdowns from the Facility.

During 2023 the Company reduced its operating costs by approximately 40 per cent., halving its senior executive leadership team from four to two and moving to a lower cost office, amongst other measures. However, the Company still faces the ongoing costs of being an AIM quoted company and maintaining access to sufficient skilled resource in order to manage its portfolio of early-stage IoT businesses. The Company is also presented, often at relatively short notice, with fundraisings planned by its portfolio companies. If it is not possible for Tern to participate in these fundraisings, the Company could find that either, or both, its shareholdings in the relevant portfolio company is diluted and their valuation reduces, which is likely to then adversely impact upon the Company and the potential returns available for Shareholders.

Post the 2024 AGM, the Board has therefore been investigating ways to appropriately raise funds to protect Tern's position in, and progress, Tern's portfolio companies, whilst also providing Tern with funding as an AIM quoted company. As at 30 June 2024, the Company had unaudited cash of £0.1 million and an outstanding liability under the Facility of £0.2 million. On 5 September 2024, the Company announced its unaudited interim results for the six months to 30 June 2024, which contained a portfolio update and an update regarding the Board's strategy to focus on realisations.

On 9 August 2024, the Company announced the disposal of part of its shareholding in Device Authority Limited ("Device Authority") for a total cash consideration of £233,000. As a consequence, Tern's holding in Device Authority reduced from 31.7% to 30.0% (before any dilution on the exercise of share options and the expected closing of tranche two of the Device Authority fundraising announced on 27 December 2023). This sale of equity in Device Authority equated to approximately 5.3% of Tern's holding in Device Authority and was appropriate to meet the Company's immediate funding requirements, but additional medium-term funding is required.

The Company's additional funding requirements could potentially be satisfied from further disposals of holdings in the Company's portfolio. However, the Directors believe that any further short-term disposals would potentially be in a manner that may not be in the best long-term interests of the Company and Shareholders. The Company is therefore proposing the Open Offer, utilising substantially all of the Director's current authority to allot Ordinary Shares without disapplying pre-emption rights, to generate funds to invest further in one or more of Tern's portfolio companies and investments, and for general corporate purposes.

In addition, the Company announced on 5 September 2024 that it is convening a general meeting to be held on 23 September 2024 to seek Shareholder approval for the Directors to have the general authority to allot up to 150,000,000 new Ordinary Shares and an authority to disapply statutory pre-emption rights in relation to an issue of up to 100,000,000 new Ordinary Shares. These authorities would allow the Company, among other things, the flexibility to raise further funds to support its portfolio companies as required.

The Open Offer

The Company is proposing to raise up to approximately £600,972 million pursuant to the Open Offer. The Issue Price of 1.25 pence per Open Offer Share represents a discount of 13.8 per cent. to the closing price of 1.45 pence per Ordinary Share on 4 September 2024, the last Business Day prior to announcing the Open Offer. The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate.

1 Open Offer Share for every 9 Existing Ordinary Shares held

and so on in proportion to any other number of Existing Ordinary Shares then held.

Qualifying Shareholders who do not take up their Basic Entitlements in full will experience a dilution to their interests of approximately 10 per cent. following Admission (assuming full subscription under the Open Offer).

Qualifying Shareholders should note that the Open Offer Shares have neither been placed with or subscribed for by investors subject to clawback under the Open Offer, nor have they been underwritten.

Conditions

The Open Offer is conditional, inter alia, upon the Admission of the Open Offer Shares becoming effective by not later than 8:00 a.m. on 24 September 2024 (or such later time and/or date as the Company may determine, being not later than the Long Stop Date).

If conditions are not satisfied and Admission does not occur by 8:00 a.m. on 24 September 2024 (or by 8:00 a.m. on the Long Stop Date), the Open Offer will not proceed and any applications made by Qualifying Shareholders will be rejected. In such circumstances, application monies will be returned (at the applicant's sole risk), without payment of interest, as soon as practicable thereafter. Revocation of applications for Open Offer Shares cannot occur after dealings have begun.

Excess applications

Qualifying Shareholders may also make applications in excess of their Basic Entitlements. To the extent that Basic Entitlements are not subscribed by Qualifying Shareholders, such Open Offer Shares will be available to satisfy such excess applications, subject always to a maximum of 48,077,813 Open Offer Shares in aggregate and provided that no Qualifying Shareholder shall be entitled to subscribe for Open Offer Shares if it would bring their aggregate interest in the share capital of the Company to more than the Aggregate Limit. To the extent that applications are received in respect of an aggregate of more than 48,077,813 Open Offer Shares and/or would result in a Qualifying Shareholder having an aggregate interest in the share capital of the Company which would exceed the Aggregate Limit, excess applications will be scaled back pro rata to the number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility.

The Open Offer will be made to Shareholders outside of the United Kingdom and EEA by means of a notice in the London Gazette.

Qualifying Shareholders should note that the Open Offer is not a rights issue.

Settlement and dealings

Application will be made to the London Stock Exchange, via the AIM Application, for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Open Offer Shares will commence at 8:00 a.m. on 24 September 2024.

CREST instructions

Application has been made for the Basic Entitlements and the Excess Entitlements for Qualifying CREST Shareholders to be admitted to CREST. It is expected that the Basic Entitlements and the Excess Entitlements will be enabled for settlement through the CREST system as soon as practicable on 6 September 2024. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying non-CREST Shareholders will receive a personalised Application Form which gives details of their Basic Entitlement under the Open Offer (as shown by the number of the Open Offer Shares allocated to them) with this Document. If they wish to apply for Open Offer Shares under the Open Offer, they should complete the accompanying Application Form in accordance with the procedure for application set out in the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Share Registrars Limited so as to arrive as soon as possible and in any event no later than 11:00 a.m. on 20 September 2024.

Qualifying CREST Shareholders, will receive no Application Form with the Circular but will receive a credit to their appropriate stock account in CREST in respect of their Basic Entitlement and if appropriate their Excess Entitlement. They should refer to the procedure for application set out in Part III of this Document. The relevant CREST instruction must have settled by no later than 11:00 a.m. on 20 September 2024.

The latest time for applications under the Open Offer to be received is 11:00 a.m. on 20 September 2024. The procedure for application and payment depends on whether, at the time at which application and payment is made, a Qualifying Shareholder has an Application Form in respect of their Basic Entitlement or have their Basic Entitlement credited to their stock account in CREST.

Directors' interests

The Directors intend to take their full entitlement under the Open Offer. The interests of the Directors in the Ordinary Shares (i) as at the date of this Document and (ii) immediately following the issue of the Open Offer Shares (assuming full subscription under the Open Offer), are as shown below.

Notes:

*assumes full take up of the 48,077,813 Open Offer Shares and that the Directors take their full entitlement in the Open Offer, but do not receive any Excess Entitlement.

Additional information

Your attention is drawn to the risk factors set out in Part II of the Circular. Shareholders are advised to read the whole of the Circular and not rely solely on the summary information presented in this announcement.

Details of the action to be taken if you wish to subscribe for Open Offer Shares are provided in Part III of the Circular.

Appendix 2 - General Meeting

The following is extracted from the General Meeting Circular, substantially in the same form.

Background and reasons for the Resolutions

At the Company's 2024 Annual General Meeting held on 27 June 2024 (the "2024 AGM") the resolution to grant the Directors the authority to issue new Ordinary Shares for cash on a non-preemptive basis did not achieve the requisite number of votes to be passed. Following the failure to pass this resolution at the 2024 AGM, the Directors do not have the authority to issue new Ordinary Shares for cash on a non-preemptive basis.

During 2023 the Company reduced its operating costs by approximately 40 per cent., halving its senior executive leadership team from four to two and moving to a lower cost office, amongst other measures. However, the Company still faces the ongoing costs of being an AIM quoted company and maintaining access to sufficient skilled resource in order to manage its portfolio of early-stage IoT businesses. The Company is also presented, often at relatively short notice, with fundraisings planned by its portfolio companies. If it is not possible for Tern to participate in these fundraisings, the Company could find that either, or both, its shareholdings in the relevant portfolio company is diluted and their valuation reduces, which is likely to then adversely impact upon the Company and the potential returns available for Shareholders.

Post the 2024 AGM, the Board has therefore been investigating ways to appropriately raise funds to protect Tern's position in, and progress, Tern's portfolio companies, whilst also providing Tern with funding as an AIM quoted company. As at 30 June 2024, the Company had unaudited cash of £0.1 million and an outstanding liability under the Facility (details of which were originally announced on 12 June 2023) of £0.2 million. The Company today announced its unaudited interim results for the six months to 30 June 2024, which contained a portfolio update and an update regarding the Board's strategy to focus on realisations.

On 9 August 2024, the Company announced the disposal of part of its shareholding in Device Authority Limited ("Device Authority") for a total cash consideration of £233,000. As a consequence, Tern's holding in Device Authority reduced from 31.7% to 30.0% (before any dilution on the exercise of share options and the expected closing of tranche two of the Device Authority fundraising announced on 27 December 2023). This sale of equity in Device Authority equated to approximately 5.3% of Tern's holding in Device Authority and was appropriate to meet the Company's immediate funding requirements, but additional medium-term funding is required.

The Company's additional funding requirements could potentially be satisfied from further disposals of holdings in the Company's portfolio. However, the Directors believe that any further short-term disposals would potentially be in a manner that may not be in the best long-term interests of the Company and Shareholders. The Company has therefore today announced, the Open Offer to raise gross proceeds of up to £600,972 through the issue of up to 48,077,813 new Ordinary Shares (the "Open Offer"), utilising substantially all of the Directors' current authority to allot Ordinary Shares without disapplying preemption rights, to generate funds to invest further in one or more of Tern's portfolio companies and investments, and for general corporate purposes.

However, in addition to the funds generated from the August 2024 disposal of part of its shareholding in Device Authority and the Open Offer, the Directors believe that having the authority to issue additional new Ordinary Shares is important for an investment company such as Tern as, among other things, it provides the Company with the flexibility to raise, or have access to, further funding, potentially at short notice, to support its portfolio companies as required and for general corporate purposes, where such funding:

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

The above should be read in conjunction with the full text of the General Meeting Circular.

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