25 November 2019

Capitalised terms in this announcement shall have the same meaning as in the Circular that will be posted to shareholders today.

Corero Network Security plc

("Corero" or the "Company")

Placing and Subscription to raise up to £3.25 million and Notice of General Meeting

Corero Network Security plc (AIM: CNS), the network security company, is pleased to announce a conditional Placing and Subscription to raise up to £3.25 million ($4.2 million) before expenses. The net proceeds of the Placing and Subscription will be used:

·     to support SmartWall sales and marketing activities in the US and Europe;

·     for further development of the SmartWall product; and

·     for the general working capital requirements for the Group.

The Placing and Subscription will require the issue and allotment by the Company of up to 92,857,143 new Ordinary Shares at the Placing Price of 3.5 pence per Ordinary Share to certain investors, including certain Directors, institutions and individual shareholders.

The Placing and Subscription are conditional, inter alia, upon Shareholders approving the Resolutions contained in a Notice of General Meeting to be sent to Shareholders today. Admission is expected to occur no later than 8.00 a.m. on 13 December 2019 or such later time and/or date as Cenkos and the Company may agree not being later than 8.00am on 31 December 2019. The Placing and Subscription are not underwritten. In the event the Resolutions are not approved at the General Meeting, the Placing and Subscription will not proceed. Should the Placing and Subscription not proceed, the Company and the Group will need to seek alternative financing. There can be no guarantee that alternative financing will be available to the Company in the required amounts or on acceptable terms for the working capital requirements of the Group.

Background to and reasons for the Transaction

On 25 September 2019, the Company announced that in order to strengthen the Company's balance sheet, to provide the Company with additional working capital prior to being cash generative and to support the planned investment in sales and marketing, the Company planned to undertake an equity fund raise before the end of the 2019 financial year to raise approximately £3.0 million. The Company also indicated that the Chairman and major shareholder indicated his support for this equity fund raise. The Transaction is now being undertaken in line with this stated intention.

Use of proceeds

The Company intends to raise up to £3.25 million ($4.2 million) before expenses in the Placing and Subscription. The aggregate estimate of expenses for the Placing and Subscription is expected to be £0.125 million.

The net proceeds of the Transaction will be deployed to support SmartWall sales and marketing activities in the US and Europe, for further development of the SmartWall product and for the general working capital requirements of the Group. If the Resolutions are not approved by the requisite number of Shareholders or the Placing and Subscription do not proceed for any other reason, the Company will be required to immediately secure alternative financing for the purposes set out above from alternative sources. There can be no guarantee that such alternative financing will be available to the Company.

The Placing and Subscription

Details of the Placing

The Company has conditionally raised up to approximately £0.95 million before expenses by the conditional Placing of up to 27,268,543 Placing Shares at the Issue Price by Cenkos, as agent for the Company, with Placees.

The Placing is conditional, inter alia, upon:

(a)       the passing of the Resolutions at the General Meeting by Shareholders;

(b)       the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission;

(c)        the Subscription Agreements becoming or being declared unconditional in all respects and not having been terminated in accordance with their terms prior to Admission; and

(d)       Admission becoming effective by no later than 8.00 a.m. on 13 December 2019 or such later time and/or date (being no later than 8.00 a.m. on 31 December 2019) as Cenkos and the Company may agree.

If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the Placees will be returned to the Placees (at the Placees' risk and without interest) as soon as possible thereafter. The Placing is not being underwritten.

The Placing Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Details of the Subscription

The Company intends to conditionally raise approximately £2.30 million before expenses by the conditional Subscription of up to 65,588,600 Subscription Shares in aggregate at the Issue Price by each of Jens Montanana, Juniper and Richard Last. Each of Jens Montanana, Juniper and Richard Last intend to enter into a Subscription Agreement with the Company pursuant to which each would conditionally agree to subscribe for either a specific number of Subscription Shares or, in respect of Jens Montanana, up to a maximum number of Subscription Shares. None of the Subscription Agreements would be conditional on any other Subscription Agreement but each Subscription Agreement would be subject to the same conditions.

The Subscription is conditional upon the passing of the Resolutions at the General Meeting by Shareholders and Admission. The Subscription is not being underwritten and the Subscription may not be fully subscribed.

The Subscription Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Under Juniper's Subscription Agreement, if any other Subscriber and/or any other Placee defaults under his or its Subscription Agreement or placing commitment and does not subscribe for some or all of the Subscription Shares and/or Placing Shares specified therein, Juniper shall, if applicable, reduce the number of Subscription Shares which it will subscribe for in the Subscription to such number as to ensure that, on Admission, Juniper will only hold such number of Ordinary Shares as will represent no more than 9.99 per cent. of the Company's issued share capital at that date.

As a result of the obligations imposed by Rule 9 of the City Code on Takeovers and Mergers (the "Code"), if the Subscription and the Placing become unconditional then, if any other Subscriber and/or any other Placee defaults under his or its Subscription Agreement or placing commitment and does not subscribe for some or all of the Subscription Shares and/or Placing Shares specified therein, Jens Montanana shall, if applicable, reduce the number of Subscription Shares which he will subscribe for in the Subscription to such number as to ensure that, on Admission, Jens Montanana will only hold such number of Ordinary Shares as will represent no more than 38.4 per cent. of the Company's issued share capital at that date (being the percentage of Existing Ordinary Shares held by him on 22 November 2019, being the last practicable date prior to publication of this announcement).

Admission, Settlement and Dealings

Application will be made to the London Stock Exchange for the admission of the New Ordinary Shares to trading on AIM. It is expected that Admission will occur and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 13 December 2019 at which time it is also expected that the New Ordinary Shares will be enabled for settlement in CREST.

Directors' Participation in the Transaction and Related Party Transaction

Jens Montanana and Richard Last, being Directors of the Company, intend to enter into Subscription Agreements, pursuant to which each  will conditionally agree to subscribe for new Ordinary Shares as part of the Subscription. The interests of Jens Montanana and Richard Last on 22 November 2019 (being the last practicable date prior to publication of this announcement) is, and immediately following Admission (assuming they enter into Subscription Agreements) will be, as follows:

* of which 33,674,846 Ordinary Shares are held in the name of JPM International Limited, which is wholly owned by Jens Montanana, and 102,953,954 Ordinary Shares are held in the name of The New Millennium Technology Trust of which Jens Montanana is a beneficiary.

** which will be subscribed for by Jens Montanana in his personal capacity or JPM International Limited, which is wholly owned by Jens Montanana, or by The New Millennium Technology Trust of which Jens Montanana is a beneficiary.

The intended participation in the Subscription by Jens Montanana and Richard Last, as Directors of the Company, constitutes a related party transaction pursuant to the AIM Rules. Peter George, Ashley Stephenson and Andrew Miller, being the Directors who are not participating in the Transaction, consider, having consulted with Cenkos, the Company's nominated adviser, that the participation in the Subscription by Jens Montanana and Richard Last, as set out above, is fair and reasonable insofar as Shareholders are concerned.

General Meeting

The Directors do not currently have the authority to allot all of the New Ordinary Shares on a non-pre-emptive basis and, accordingly, the Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting. In addition, the Board is seeking the approval of shareholders to dis-apply pre-emption rights in respect of the New Ordinary Shares.

A notice is being sent to shareholders convening a general meeting of the Company to be held at 11.00 a.m. on 12 December 2019 at 68 Lombard Street, London EC3V 9LJ, at which the following Resolutions will be proposed to approve:

Ordinary Resolution

1.            authority for the Directors to allot the New Ordinary Shares up to a maximum aggregate amount of £928,571.43 (being up to 92,857,143 New Ordinary Shares (the maximum number available under the Placing and Subscription)); and

Special Resolution

2.            the disapplication of the statutory pre-emption rights in connection with the allotment of up to 92,857,143 New Ordinary Shares pursuant to the Placing and Subscription.

To be passed, Resolution 1 (proposed to be passed as an ordinary resolution) will require a simple majority, and Resolution 2 (proposed to be passed as a special resolution) will require a majority of not less than 75 per cent. of persons voting in person or by proxy in favour of the relevant Resolution.

The authorities to be granted pursuant to Resolutions 1 and 2 shall expire on whichever is the earlier of the conclusion of the next Annual General Meeting of the Company or the date falling six months from the date of the passing of Resolutions 1 and 2 (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 21 May 2019.

Circular and Form of Proxy

A Circular and Form of Proxy will be sent to Shareholders today and will be available from the Company's website: https://www.corero.com/investors/

Recommendation

The Directors consider the Placing and Subscription to be in the best interests of the Company and its Shareholders as a whole. The Directors unanimously recommend that Shareholders vote in favour of all the Resolutions at the General Meeting, as they intend to do in respect of their own beneficial holdings, representing, in aggregate, approximately 39.18 per cent. of the Existing Ordinary Shares.

The Placing and Subscription are conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Placing and Subscription will not proceed and the Group will need to seek alternative financing. There can be no guarantee that alternative financing will be available to the Company in the required amounts or on acceptable terms for the ongoing working capital requirements of the Group.

Enquiries:

About Corero Network Security

Corero Network Security is a leader in real-time, high-performance DDoS defense solutions. Service providers, hosting providers and digital enterprises rely on Corero's award winning technology to eliminate the DDoS threat to their environment through automatic attack detection and mitigation, coupled with complete network visibility, analytics and reporting. This industry leading technology provides cost effective, scalable protection capabilities against DDoS attacks in the most complex environments while enabling a more cost effective economic model than previously available. For more information, visit www.corero.com

Important Information

The information contained within this announcement was deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 prior to release of this announcement. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

The distribution of this announcement and the offering of the Placing Shares and the Subscription Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or Cenkos Securities plc that would permit an offering of such shares or possession or distribution of this announcement or any other offering or public material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and Cenkos Securities plc to inform themselves about, and to observe such restrictions.

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and neither Cenkos Securities plc nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

Cenkos Securities plc, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting solely as nominated adviser and broker to the Company in connection with the Placing and this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Cenkos Securities plc or for affording advice in relation to this announcement or any matters referred to herein. The responsibilities of Cenkos Securities plc as the Company's nominated adviser and broker under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange plc and are not owed to the Company or to any director of or shareholder of the Company or any other person, in respect of his decision to acquire shares in the capital of the Company in reliance on any part of this announcement, or otherwise.