Tern (LSE:TERN), the AIM-listed investment company backing early-stage Internet of Things technology businesses, has invested £117,195 in new unsecured convertible loan notes issued by Talking Medicines Limited.
The notes carry a principal value of £234,389, roughly double the cash injected, funded from proceeds of Tern's placing announced on 15 July.
The CLNs pay 10% annual interest and convert at a 20% discount on an exit or a fundraising of at least £2 million, maturing on 21 November 2029 if neither occurs, aligning with Tern's existing £0.79 million holding in the business.
Tern's equity stake in Talking Medicines, an AI-driven healthcare advertising analytics business, remains unchanged at approximately 23.8%, while its total convertible loan note holding rises to approximately £1.02 million.
As at 31 December 2025, Tern's combined equity and loan note holding in Talking Medicines carried an audited book value of roughly £1.7 million.
Separately, Tern's board has raised its commitment on distributions from portfolio exits over £1 million, from a minimum 50% of net proceeds, announced in October, to 70%.
Using an illustrative £5 million disposal, after estimated costs of £350,000, shareholders would receive at least £2.56 million under the new threshold.
"This reflects the board's confidence in the maturity of the Tern portfolio and our continued focus on delivering value for shareholders through realisations while retaining sufficient flexibility to support the company in the longer term", said Jane McCracken, Tern's interim non-executive chair.
News Intelligence what this means for the company
Tern has deepened its exposure to Talking Medicines by investing £117,195 in convertible loan notes with a principal value of £234,389, funded from its July placing proceeds. Separately, the board has raised its minimum distribution commitment from portfolio exits to 70% of net proceeds—a signal of confidence in portfolio maturity, though the company's cash position stood at just £0.05m at year-end 2025, making near-term liquidity dependent on realizations.
The distribution pledge increase to 70% clarifies capital allocation discipline and may appeal to shareholders seeking cash returns, but the move is contingent on exits materializing. The Talking Medicines investment deepens concentration risk in a single portfolio company (now ~£1.7m in combined book value) at a time when Tern's cash runway is minimal.
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