TIDMENET
RNS Number : 2213X
Ethernity Networks Ltd
19 December 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the Market Abuse Regulations (EU) No. 596/2014
("MAR"). With the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM, AUSTRALIA, NEW
ZEALAND, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO BUY, ACQUIRE
OR SUBSCRIBE FOR (OR THE SOLICITATION OF AN OFFER TO BUY, ACQUIRE
OR SUBSCRIBE FOR) ORDINARY SHARES TO ANY PERSON WITH A REGISTERED
ADDRESS IN, LOCATED IN, OR WHO IS A RESIDENT OF, THE UNITED STATES,
AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR THE REPUBLIC OF SOUTH
AFRICA OR IN ANY OTHER JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL OR CONTRAVENE ANY
REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER THE SECURITIES
LAWS OF ANY SUCH JURISDICTION.
19 December 2023
ETHERNITY NETWORKS LTD
("Ethernity" or the "Company")
Issue of equity
Ethernity Networks (AIM: ENET.L, OTCMKTS: ENETF), a leading
supplier of networking processing semiconductor technology ported
on field programmable gate arrays for virtualised networking
appliances, announces a fundraise to raise GBP700,000 (US$ 882,000)
through the issue of new ordinary shares of NIS 0.001 each
("Ordinary Shares") at 1 p per share (the "Issue Price"), as well
as the conversion of GBP75,000 of loans into new Ordinary Shares at
the Issue Price by a Director of the Company.
Highlights
-- Placing to raise GBP650,000 through the issue of 65,000,000
new Ordinary Shares (the "Placing Shares") at the Issue Price (the
"Placing"). CMC Markets UK plc ("CMC") is acting as placing agent
to the Placing.
-- Subscription by an existing shareholder of the Company for
5,000,000 new Ordinary Shares (the "Subscription Shares") at the
Issue Price to raise an additional GBP50,000 (the
"Subscription")
-- In total, GBP700,000 has been raised pursuant to the Placing
and Subscription (together, the "Fundraise")
-- In addition, David Levi, Director and CEO, has agreed to
subscribe for a further 7,500,000 new Ordinary Shares (the
"Conversion Shares") at the Issue Price in satisfaction of NIS
347,350 (GBP75,000, US$ 94,500) of short-term loans to the Company
(details of which were announced on 26 October 2023) to further
strengthen the Company's working capital position
-- Following completion of the Fundraise, the Company's cash
balances at the end of December 2023 are expected to be
approximately US$2.1 million
-- Subject to the Company finalising a settlement with creditors
under the TSP (as defined below), the net Fundraise proceeds will
be used to strengthen the Company's balance sheet to allow the
Company to service existing contracts, capitalise on new
opportunities and support its growth plan
-- Admission of the Placing Shares, the Subscription Shares and
the Conversion Shares (together, the "New Ordinary Shares") is
expected to occur on or around 27 December 2023
David Levi, CEO, commented: "Ethernity continues to progress its
current strategy, cantered around its semiconductor technology for
Ethernet Access and fibre access technology to deliver a broad
offering to OEMs from IP licensing, conversion to eASIC or ASIC,
through to delivery of a complete customised system. The Fundraise,
together with the collection of cash during Q4 2023, allows the
Company to be financially positioned for the next stage of its
development to service existing contracts and capitalise on new
opportunities."
Background to and reasons for the Fundraise
As highlighted in the Company's full year trading update,
announced on 5 December 2023 (the "FY Trading Update"), the
Directors consider that because of the positive cash collection and
new contracts won during the fourth quarter of 2023, the Company
may have been able to exit the ongoing temporary suspension of
proceedings ("TSP") without the requirement to raise any additional
funds. In order to exit the TSP, the Company will be required to
agree a settlement payment schedule with its creditors at a meeting
of creditors, which will be convened in due course.
Notwithstanding this progress, the Company flagged in the FY
Trading Update that it was considering options to raise additional
funding to strengthen its balance sheet, as the Directors believe
that it will best position the Company to service its existing
contracts and capitalise on new opportunities to support its growth
plan. The Board considers that it is appropriate to undertake the
Fundraise in accordance with its terms to provide the Company with
the additional funding in the most cost effective and time
efficient manner. Whilst the Board was keen to ensure that existing
shareholders in Ethernity were able to participate in any fundraise
on equivalent terms, it was not possible to do so in the permitted
timeframe and the Board considers that the relatively small
discount of the Issue Price compared to the closing bid price of an
Ordinary Share on 18 December 2023 (the day prior to this
announcement) ensures that dilution to existing shareholders in the
Company has been minimised.
Following receipt of the net Fundraise proceeds (totalling
approximately GBP660,000), the Board anticipates that the Company's
cash position at the end of 2023 will be approximately $2.1
million. The Company will be able to utilise its available cash
balances for the ongoing operations of the Company as well as
towards any payment schedule agreed with the creditors.
Details of the Placing and Subscription
The Company has resolved to issue 65,000,000 Placing Shares at
the Issue Price raising gross proceeds of GBP650,000.
The Company has entered into an agreement pursuant to which CMC,
as agent for the Company, has agreed to use its reasonable
endeavours to procure placees for the Placing at the Issue Price.
The Placing has not been underwritten.
In addition, an existing shareholder of the Company has
subscribed for a total of 5,000,000 Subscription Shares at the
Issue Price, raising a further GBP50,000 pursuant to the
Subscription.
Director loan conversion
David Levi, CEO, has subscribed for 7,500,000 Conversion Shares
at the Issue Price in repayment of 347,350 NIS (GBP75,000, US$
94,500) of his 1,000,000 NIS short-term loan to the Company,
details of which were announced on 26 October 2023. As previously
announced, David Levi will be repaid the outstanding balance of the
loan as a priority creditor on exiting the TSP.
On Admission, David Levi's interest in the Company's Ordinary
Shares shall comprise 20,949,065 Ordinary Shares representing
approximately 5.56% of the Company issued share capital as enlarged
by issue of the New Ordinary Shares. Further details of David
Levi's share conversion is set out in the table at the end of this
announcement.
Admission to trading
The New Ordinary Shares are being issued pursuant to the
Company's existing authorities to issue and allot new Ordinary
Shares free of pre-emption rights. The New Ordinary Shares will
rank pari passu with the Company's existing Ordinary Shares.
Application is being made for the admission of the 77,500,000 New
Ordinary Shares to trading on AIM ("Admission") and Admission is
expected to occur at 8.00 a.m. on or around 27 December 2023.
Total voting rights
Following Admission, the Company's enlarged issued share capital
will be 376,721,091 Ordinary Shares. The Company holds no Ordinary
Shares in Treasury. This figure of 376,721,091 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.
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 (Sales and Corporate Broking)
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0)20 7562
0930
Lucy Williams / Duncan Vasey / Eran Zucker
About Ethernity ( www.ethernitynet.com )
Ethernity Networks (AIM: ENET.L, OTCMKTS: ENETF) provides
innovative, comprehensive networking and security solutions on
programmable hardware for accelerating telco/cloud networks.
Ethernity's semiconductor logic offers complete Carrier Ethernet
Switch Router data plane processing and control software with a
rich set of networking features, robust security, and a wide range
of virtual function accelerations to optimize telecommunications
networks. Ethernity's complete solutions quickly adapt to
customers' changing needs, improving time-to-market, and
facilitating the deployment of 5G, edge computing, and NFV.
Notification and public disclosure of transactions by persons
discharging managerial responsibilities and persons closely
associated with them
1 Details of the person discharging managerial responsibilities
/ person closely associated
a) Name David Levi
2 Reason for the notification
a) Position/status CEO
b) Initial notification Initial notification
/Amendment
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer
or auction monitor
a) Name Ethernity Networks Ltd.
b) LEI 213800LZJO33QBNXU496
4 Details of the transaction(s): section to be repeated for
(i) each type of instrument;
(ii) each type of transaction; (iii) each date; and (iv)
each place where transactions have been conducted
a) Description of the ordinary shares of NIS 0.001 nominal value
financial instrument, each
type of instrument ISIN: IL0011410359
Identification code
b) Nature of the transaction Conversion of loan
c) Price(s) and volume(s)
Price(s) Volume(s)
1p 7,500,000
d) Aggregated information N/a - single transactions
e) Date of the transaction 27 December 2023
f) Place of the transaction Outside a trading venue
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END
IOEFFSEEAEDSEIE
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