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RNS Number : 0147T
Ethernity Networks Ltd
10 November 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse (amendment) (EU Exit) Regulations 2019/310
("MAR"). With the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
10 November 2023
Ethernity Networks Ltd
("Ethernity" or the "Company")
Update Regarding Subscription Agreement and TVR
Notice of General Meeting
Ethernity Networks Ltd (AIM: ENET; OTCMKTS: ENETF), a leading
supplier of networking processing semiconductor technology ported
on field programmable gate arrays for virtualised networking
appliances, announces the following update on the share
subscription agreement with 5G Innovation Leaders Fund LLC (the
"Subscriber"), details of which were announced on 25 February 2022
(the "Subscription Agreement").
On 24 October 2023, the Company announced that it was engaging
with the Subscriber to seek to come to an agreed position in
relation to the Subscription Agreement. The Company is pleased to
announce that it has now entered into a settlement deed with the
Subscriber (the "Agreement"), pursuant to which the Company will
issue a fixed number of shares to the Subscriber, terminate the
Subscription Agreement, and extinguish the Company's liability to
the Subscriber.
Pursuant to the Agreement, the Company will issue up to a
maximum of 150,000,000 new ordinary shares of NIS 0.001 each in the
Company ("Ordinary Shares") to the Subscriber (the "Settlement
Shares"). The Settlement Shares will be issued to the Subscriber in
tranches, subject to the restriction that the Subscriber cannot
hold an interest in more than 24.99% of the Company's issued share
capital from time to time.
T he Company has issued and allotted an initial 44,900,000
Ordinary Shares (the "Tranche 1 Shares"), conditional on their
admission to trading on AIM, pursuant to the Company's existing
share authorities. It will issue a further 43,600,000 Ordinary
Shares to the Subscriber on receipt of a notice from the
Subscriber, also pursuant to the Company's existing share
authorities. Subject to the Company receiving shareholder approval
for an increase in its headroom to allot shares free from
pre-emptive or other preferential rights or other rights or
restrictions, the Company will issue a further 61,500,000 new
Ordinary Shares (the "Conditional Subscription Shares") to the
Subscriber on receipt of subsequent notices. Out of the 61,500,000
Conditional Subscription Shares, 50,000,000 can be issued only
provided that the market price of an Ordinary Share exceeds 0.3p at
the time of issue. Ethernity will shortly be convening a general
meeting ("General Meeting") of the Company to seek shareholder
approval for an increase in its authorities to allot shares on a
non-preemptive basis.
Subject to the passing of the resolutions at the General
Meeting, the Subscriber will have until the thirtieth calendar day
after the date of the General Meeting to notify the Company to
issue the Settlement Shares in full (the "Issuance Notice Period").
Should the Subscriber not call the entire allotment of the
Settlement Shares during the Issuance Notice Period, the Company
will have no further obligation to the Subscriber at the end of the
Issuance Notice Period.
The entering into of the Agreement has been approved by the
Court in Lod in accordance with the requirements of the ongoing
temporary suspension of proceedings to which the Company is subject
("TSP") process. Pursuant to the Agreement, should the resolutions
not be passed at the General Meeting, the Company would have an
outstanding debt to the Subscriber of US$600,000 to reflect the
non-issue of the Conditional Subscription Shares. The Directors of
Ethernity believe that this debt could seriously adversely impact
the Company's ability to exit the TSP process and therefore
strongly recommends that shareholders vote in favour of the
resolutions at the General Meeting.
Notice of General Meeting
A circular convening the General Meeting of the Company, to be
held at 3rd Floor Beit Golan, 1 Golan St. Corner HaNegev, Airport
City 7019900, Israel at 11:00 a.m. IST (09:00 a.m. GMT) on 14
December 2023 will be posted to shareholders shortly and will be
made available on the Company's website at:
https://ethernitynet.com/investors/ .
As previously announced, in order to exit the TSP, it is
expected that the Company will be required to raise additional
funds. Whilst the structure of this is not yet known, the Board
believes it is prudent to put in place sufficient authorities to
permit an equity fundraising, should that be the required route.
The resolutions at the General Meeting are therefore seeking
sufficient headroom over and above those required to issue the
Conditional Subscription Shares. Should any fundraise takes place,
the Company will prioritise structures that would enable existing
shareholders to participate on the same terms as any incoming
investors.
Application for admission and total voting rights
Application has been made to the London Stock Exchange for the
Tranche 1 Shares to be admitted to trading on AIM ("Admission"),
and Admission is expected to occur on or around 14 November 2023.
The shares will, upon Admission, rank pari passu with the existing
Ordinary Shares of the Company.
Following Admission, the Company's enlarged issued share capital
will be 194,121,091 Ordinary Shares. The Company holds no Ordinary
Shares in Treasury. This figure of 194,121,091 Ordinary Shares 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 in their interest in, the
share capital of the Company under the FCA's Disclosure Guidance
and Transparency Rules.
Holdings in Company
On Admission, the Tranche 1 Shares will represent 23.13% of the
Company's issued share capital as enlarged by the issue of those
shares. The Subscriber has confirmed to the Company that it
currently holds no Ordinary Shares. Therefore, its interest in the
Company's share capital following Admission will be 23.13% of the
Company's issued share capital.
For further information, please contact:
Ethernity Networks Ltd Tel: +972 8 915 0392
David Levi, Chief Executive Officer
Allenby Capital Limited (Nominated Adviser Tel: +44 (0)20 3328
and Joint Broker) 5656
James Reeve / Piers Shimwell (Corporate
Finance)
Amrit Nahal / Stefano Aquilino (Sales
and Corporate Broking)
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0)20 7562
0930
Lucy Williams / Duncan Vasey / Eran Zucker
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