Tern PLC (AIM:TERN) shares surged some 30% higher, to 1.18p, after it increased exposure to Talking Medicines - an AI company aiming to help healthcare advertising agencies analyse conversational data for pharmaceutical clients - through around £270,000 of new unsecured convertible loan notes, using a structure that gives the AIM-listed investor roughly twice the principal exposure of its fresh cash and cancelled debt contribution.
The investment company, which backs early-stage Internet of Things technology businesses, said the CLNs were issued after it agreed to cancel around £87,000 owed by Talking Medicines and put in a further £48,000 of new funds.
The new cash investment was funded from proceeds of Tern’s recent Open Offer. The notes carry 10% annual interest and are convertible on either an exit or a Talking Medicines fundraising of at least £2 million, in each case at a 20% discount to the exit or fundraising price.
If neither event takes place, the notes mature on 21 November 2029, in line with Tern’s existing £0.52 million of convertible loan notes in Talking Medicines. Following the issue, Tern’s equity stake in Talking Medicines remains unchanged at around 23.8%, while its total convertible loan note holding rises to around £0.79 million.