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Ethernity inks investment deal with New Tech Capital

By Josh White

Date: Friday 17 May 2024

Ethernity inks investment deal with New Tech Capital

(Sharecast News) - Network processing semiconductor technology specialist Ethernity Networks announced a structured investment agreement with New Technology Capital Group (New Tech) on Friday.
The AIM-traded firm said that under the agreement, New Tech would invest £0.8m in Ethernity, with the fundraising expected to close next week.

As part of the deal, New Tech would receive a contingent warrant exercisable over new ordinary shares of ILS 0.001 each.

On closing, Ethernity would issue 40,000,000 new shares to New Tech.

The warrant would initially be exercisable at a price of 1p per share for 45 days from the closing date.

After that, the exercise price would be reset based on the average of the lowest five daily volume-weighted average prices of an ordinary share during the 20 trading days preceding the receipt of a warrant exercise notice by the company, with a 15% discount applied.

The board said the warrant would have an eight-month exercise period and could be exercised in full or in part, with a maximum of five exercise notices issued.

It said the amount available under the warrant would be £0.8m, less the value of the 40,000,000 subscription shares at the relevant exercise price.

That meant New Tech could only exercise the warrant for an amount exceeding the difference between the maximum amount of £0.8m and the value of the subscription shares.

Ethernity said the exercise price of the warrant was pre-funded by the £0.8m gross fundraising amount, so no additional payment would be required from New Tech to Ethernity on exercise.

If the exercise price remained above 1p throughout the exercise period, the maximum number of additional ordinary shares that would be issued under the agreement would be 40,000,000.

Ethernity said it would use the net proceeds from the fundraising for general working capital purposes, bolstering its financial position as it developed its networking technology.

"We are pleased to announce the successful conclusion of this transaction," said chief executive officer David Levi.

"We have strong confidence in the company's future prospects, anticipating a rise in the company's value as we embark on strategic initiatives."

At 1440 BST, shares in Ethernity Networks were down 5.2% at 0.71p.

Reporting by Josh White for Sharecast.com.

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