SENSYNE HEALTH PLC

("Sensyne" or the "Company")

Publication of circular and notice of general meeting

Oxford, U.K. - 18 May 2022: Sensyne Health plc (LSE:SENS) announces that further to the announcement made on 19 April 2022 regarding the execution of an amendment and restatement to the note purchase agreement with existing and new secured lenders (the "Strategic Financing"), a circular (the "Circular") has been published on the Company's website, www.sensynehealth.com/investors/investor-hub, and will shortly be posted to Shareholders. The Circular contains the notice convening the General Meeting to be held at 11.00 a.m. (UK time) on 6 June 2022 to consider certain Resolutions in connection with the Strategic Financing (including the Rule 9 Waiver Resolution).

This Announcement also constitutes the notification of the Company's intention to cancel the admission of its Ordinary Shares from trading on AIM.

Unless otherwise indicated, capitalised terms in this Announcement have the meaning given to them in the definitions section included in Appendix II.

The Circular contains, amongst other things, a letter from the Chairman of Sensyne (which is reproduced in full below), details of the Strategic Financing, the effects of the AIM Delisting and the Re-registration, additional information on the Concert Party, a notice of General Meeting, an indicative timetable of principal events (which is attached as Appendix I to this Announcement) and action to be taken by Shareholders. Shareholders should read the Circular carefully and in its entirety before making a decision with respect to the Resolutions.

Action required and Recommendation

As further detailed in the Circular, full implementation of the Strategic Financing requires the approval by Shareholders of the Resolutions to be proposed at the General Meeting to be held at the offices of Covington & Burling LLP, 22 Bishopsgate, London EC2N 4BQ at 11.00 a.m. (UK time) on 6 June 2022.

Shareholders are encouraged to read the Circular in full and should note the recommendation from the Independent Directors to vote in favour of all the Resolutions for the reasons set out in paragraph 18 of the Circular - 'Recommendation'.

Rule 9 Waiver Resolution

The Strategic Financing is subject to the passing of the Rule 9 Waiver Resolution by the Independent Shareholders to approve the waiver granted by the Takeover Panel of the obligation of the Concert Party to make a general offer for the Company under Rule 9 of the Takeover Code, which would otherwise arise as a result of the issue to the Concert Party of Ordinary Shares pursuant to the Conversion and/ or the exercise of Warrants. Further details on the Rule 9 Waiver Resolution, may be found below under paragraph 10 - 'Takeover Code and Rule 9 Waiver Resolution'.

Cancellation from AIM

Subject to the passing of the Resolutions, the admission of the Company's Ordinary Shares will be cancelled from trading on AIM with effect from 07.00 a.m. on 20 June 2022.  Consequently, Shareholders will no longer be able to buy and sell Ordinary Shares on AIM after 17 June 2022 as there will be no trading facility available to Shareholders after this date.  Further details on the Cancellation, including the reasons for seeking the cancellation and other matters relevant to Shareholders in connection with the cancellation, may be found below under paragraph 11 - 'AIM Delisting'.

Extract of the Letter from the Chairman of Sensyne Health plc

1.           Introduction

On 26 January 2022, the Company entered into the Original Note Purchase Agreement with Gatemore Special Opportunities Master Fund, Lansdowne, Sand Grove and Peel Hunt (solely by virtue of Peel Hunt receiving the majority of its fee in Loan Notes) to secure £6.35 million principal amount of Original Notes and an additional £5.0 million principal amount of Loan Notes to be purchased by mutual consent of the Original Purchasers and the Company. The combined proceeds of £11.35 million were expected to secure the Company's short-term financing requirements and fund the business through the Formal Sale Process which was initiated on 2 November 2021.

In the absence of any offer (including for strategic investment) under the FSP, on 8 April 2022, the Company announced that it had entered into a non-binding term sheet with Gatemore Special Opportunities Master Fund and Lansdowne to amend the Original Note Purchase Agreement to provide additional capital through the issue of additional Loan Notes. The Company also announced that the founder and former Chief Executive Officer of the Company, Rt. Hon. Lord Paul Drayson, had agreed to step down from the Board with immediate effect and that the Board had agreed to appoint Mr. Alex Snow as Chief Executive Officer upon entry into the Amended and Restated Note Purchase Agreement.

On 19 April 2022, the Company announced that it had amended and restated the Original Note Purchase Agreement for the purchase of, in aggregate, £26.35 million principal amount of Loan Notes (being the existing £6.35 million principal amount of Original Notes and up to an additional £20 million principal amount of Additional Notes). The Amended and Restated Note Purchase Agreement sets out, among other things, the resolutions that need to be passed by Shareholders in connection with the Strategic Financing, including, approval of the cancellation of admission of the Ordinary Shares to trading on AIM. On 22 April 2022, the Company received £6.0 million from the purchase of Additional A Notes by Gatemore Investment Partners I LP, Lansdowne and Hambro Perks Nominee.

Shareholder approval is being sought for the passing of the Resolutions at the General Meeting in connection with the Strategic Financing. The purpose of the Circular is to explain the background to, and the reasons for, the Strategic Financing and why the Directors believe that the Strategic Financing is in the best interests of the Company and its Shareholders as a whole, and to recommend that you vote in favour of the Resolutions.

If the Conversion Conditions (including the passing of Resolutions 1 to 7 in the Notice of General Meeting included in the Circular) are not satisfied by 9 July 2022, the Relevant Purchasers have the right to exercise the Asset Purchase Option. Upon exercise of the Asset Purchase Option, the Company will be required to transfer all of the material assets of the Group (including the Strategic Research Agreements and other data collaboration agreements) to Sensyne Holdings UK and transfer to the Relevant Purchasers the entire issued share capital of Sensyne Holdings UK for consideration of (i) the sum of £1 and (ii) the assumption by the Relevant Purchasers of all the Company's outstanding obligations in respect of the Loan Notes.

In the event that the Resolutions are not passed and the Asset Purchase Option is exercised, this will result in a fundamental change of the Company's business requiring approval of the Company's Shareholders by passing an ordinary resolution in a general meeting in accordance with the AIM Rules for Companies.

2.           Background to and reasons for the Strategic Financing

On 2 November 2021, the Company announced the launch of a strategic review and commencement of a formal sale process. As part of this process, JP Morgan and Peel Hunt, as the Company's joint financial advisers, contacted more than 100 corporates and financial sponsors to solicit interest in an offer for the Company or strategic investment into the Company. Possible offerors were provided with access to due diligence materials and focused sessions with company management and employees under the terms of non-disclosure agreements. On 8 April 2022, the Company announced that a small number of parties were having discussions with the Company who may or may not make an offer for the Company or some other strategic investment in or transaction with the Company. Whilst a number of parties conducted significant due diligence over the course of the FSP, no indicative offer proposals were received.

As part of the Formal Sale Process, the Company was seeking funding from a number of different sources. Due to the pressing need for additional capital to maintain the Company's operations and solvency position and in the absence of any alternatives, the Company announced on 8 April 2022 that it had entered into a non-binding term sheet with Gatemore Special Opportunities Master Fund and Lansdowne to implement the Strategic Financing and amend the Original Note Purchase Agreement. This was to provide additional capital through the issue of additional Loan Notes to fund the costs associated with maintaining the Company's operations in order to enable the formulation and execution of a restructuring and financing plan as part of the Strategic Financing.

On 19 April 2022, the Company announced that the Company and the Note Purchasers entered into the Amended and Restated Note Purchase Agreement for the purchase of, in aggregate, £26.35 million principal amount of Loan Notes (being £6.35 million and up to an additional £20 million principal amount of Original Notes and Additional Notes, respectively). The terms of the Amended and Restated Note Purchase Agreement set out the Strategic Financing, which, among other things, provided for the immediate appointment of Mr. Alex Snow as Chief Executive Officer and proposed the cancellation of admission of the Ordinary Shares to trading on AIM. The Company also announced that, in light of the Strategic Financing, the Board had decided to end the Formal Sale Process and to terminate all ongoing discussions.

Without the proceeds from the Additional A Notes, the Company would have become insolvent and been placed into administration in April 2022.

Over the course of the coming months, the Board, with the support of the Noteholders, expects Alex Snow to effect a restructuring and refocusing of the business on its core real world patient data business unit, and work in partnership with the NHS and the life sciences community to develop and discover new medicines and improve patient outcomes through the analysis of anonymised real world patient data.

The Noteholders have committed to take reasonable steps to exercise their rights under the Amended and Restated Note Purchase Agreement in a manner that:

o  continues the Company's ethical use of patient data;

o  is consistent with the Company's goal of enabling the Company to realise its mission to become the leader in the ethical application of clinical AI to health data, to improve patient care and accelerate medical research; and

o  allows for a sustainable commercial model to be put in place with the NHS Trusts that reflects the value of patient data supplied to the Company by the NHS Trusts.

3.           Current trading and outlook

The Company published its unaudited interim results for the six month period ended 31 October 2021 on 31 January 2022. The unaudited revenue figure for the period was £1.0 million and the unaudited adjusted operating loss for the same period was £14.7 million.

The unaudited revenue for the year ended 30 April 2022 was approximately £2.0 million.  The Company's unaudited cash position prior to the receipt of Additional A Notes on 22 April 2022 was £1.2 million.  As of 12 May 2022, the Company's unaudited cash position was £5.0 million.

The Company has initiated an immediate restructuring of the business to reduce costs and refocus the business on its core real world patient data business and partnership with the NHS and life sciences community. This restructuring is expected to result in a significant reduction in the size of the workforce and the disposal of parts of the business as described below. Whilst the Company has signed one contract and expects to sign a number of other small contracts with major pharmaceutical companies this year, the contract values are modest and the prospect of more and larger contracts continues to remain very uncertain.

4.           Restructuring and Refocusing of the Company

Sensyne is a clinical artificial intelligence company operating a unique business model - a for-profit plc making a positive social impact, sharing the financial returns it makes with the health systems that provide the Company with access to anonymised patient data. The Company applies clinical AI in the healthcare and life science industries. In healthcare, Sensyne delivers remote patient monitoring and real-time decision-making systems for healthcare organisations and their patients. In life sciences, Sensyne analyses large complex anonymised data sets to help life sciences companies accelerate the development of new medicines.

The Company's cost base (£21.5 million unaudited operating loss for the six months ended 31 October 2021), which largely consists of costs associated with employing approximately 144 employees (117 net of resignations as at 13 May 2022), far exceeds revenues (£1.0 million for the same period) and is unsustainable without access to significant additional capital. 

In the absence of any offers under the FSP or alternative sources of working capital including from strategic investors or generation of substantial commercial revenues, the Company entered into the Amended and Restated Note Purchase Agreement to access additional capital from the Noteholders. Under the terms of this agreement, the Company has appointed Alex Snow as CEO to effect a restructuring and refocusing of the business on its core real world patient data business unit which will result in a streamlined business with a much reduced cost base. This restructuring exercise started in late April 2022 and is expected to be largely completed by the end of August 2022.

The restructuring will require significant headcount reductions in the Company's R&D operations as the business seeks only to retain the skills and expertise necessary to support its focus on real world patient data. Furthermore, the restructuring will include the disposal of, closure of and/or cessation of R&D expenditure on certain parts of the business not related to the life sciences-focused future of the business. This will include the healthcare product division including the Company's digital health applications as these are not viewed as being core to the future operations of the Company. The Company's central, financial and administrative functions are also expected to be substantially reduced to align the balance of skills and functions of the same in a refocused business that is no longer quoted on AIM. The Company will also focus its activities on the UK to support its partnership with the NHS and, consequently, its activities elsewhere, particularly the US, will be supported from the UK.

The Directors believe that the Strategic Financing is in the best interest of the employees and management of Sensyne as it will ensure Sensyne will have the resources available to drive development and commercialisation of its core real world patient data business unit. The resources provided by the Strategic Financing should allow the Company to complete the restructuring and, ultimately, provide its remaining employees opportunities in a refocused business at the forefront of real world patient data and AI.

The Company has relocated to a smaller headquarter facility within Oxford, UK to reduce costs. Related to this relocation, Sensyne Group UK recently assigned its interests in three leasehold interests at the Schrödinger Building, The Oxford Science Park, Oxford to ExScientia AI Limited on 25 March 2022.

5.           Intention Statements

None of Gatemore, Lansdowne, Sand Grove, Hambro Perks and Alex Snow intend to make a general offer for the Company. The long-term justification for the Strategic Financing is to implement the restructuring and refocusing plan as described in paragraph 4 - 'Restructuring and Refocusing of the Company'. The Concert Party has confirmed to the Company that it is not proposing, following the increase in the percentage interest in Ordinary Shares as a result of the Conversion and the exercise of Warrants, to seek any changes to the business beyond those described under paragraph 4 - 'Restructuring and Refocusing of the Company'. Whilst the composition of the Board is expected to remain unchanged for the period up to the AIM Delisting taking effect, it is expected that the Board will undergo a restructuring to reduce costs and align skills and experience with those required of an unquoted company.

The restructuring will require significant headcount reductions in the Company's R&D operations as the business seeks only to retain the skills and expertise necessary to support its focus on real world patient data. Furthermore, the restructuring will include the disposal of, closure of and/or cessation of R&D expenditure on certain parts of the business not related to the life sciences-focused future of the business. This will include the healthcare product division including the Company's digital health applications as these are not viewed as being core to the future operations of the Company. The Company's central, financial and administrative functions are also expected to be substantially reduced to align the balance of skills and functions of the same in a refocused business that is no longer quoted on AIM. The Company will also focus its activities on the UK to support its partnership with the NHS and, consequently, its activities elsewhere, particularly the US, will be supported from the UK. 

The Concert Party has also confirmed that it has no intention to make any changes in relation to:

·      the location of the Company's places of business and headquarters (the Company will focus its operations on the UK and retain its headquarters in the UK);

·      employer contributions into the Company's pension schemes, the accrual of benefits for existing members and the admission of new members; and

·      any redeployment of the fixed assets of the Company.

The participation in the Strategic Financing by Gatemore is in the ordinary course of Gatemore's business and is not expected to have any material effect on its future business or any material financial impact on its earnings, assets or liabilities.

The participation in the Strategic Financing by Lansdowne is in the ordinary course of Lansdowne's business and is not expected to have any material effect on its future business or any material financial impact on its earnings, assets or liabilities.  

The participation in the Strategic Financing by Sand Grove is in the ordinary course of Sand Grove's business and is not expected to have any material effect on its future business or any material financial impact on its earnings, assets or liabilities.

The participation in the Strategic Financing by HPL is in the ordinary course of HPL's business and is not expected to have any material effect on its future business or any material financial impact on its earnings, assets or liabilities.

Beyond the ability to participate in future tranches of the Loan Notes, the Concert Party has not entered into and has not had discussions on proposals to enter into any incentivisation arrangements with members of the Company's management.

The Ordinary Shares are currently admitted to trading on AIM. As set out in paragraph 11 - 'AIM Delisting', shortly after completion of the Strategic Financing, the Company intends to cancel its admission to trading on AIM.

6.           Details of the Strategic Financing

Loan Notes

On 18 April 2022, the Company entered into the Amended and Restated Note Purchase Agreement pursuant to which the Purchasers (as such term is defined in the Amended and Restated Note Purchase Agreement) agreed to purchase Loan Notes with principal amount of up to £26,350,000 in the following tranches:

(a)   the Original Notes, being a tranche of £6,350,000 principal amount of Loan Notes. The Original Notes were issued to the Original Purchasers on 28 January 2022;

(b)   the Additional A Notes, being a tranche of £6,000,000 principal amount of Loan Notes. The Additional A Notes were issued to the Additional A Note Purchasers on 21 April 2022; and

(c)   two subsequent tranches of Loan Notes, the Additional B Notes and the Additional C Notes, which may each be issued in any principal amount provided that the total aggregate amount of Additional Notes does not exceed  £20,000,000. The Additional B Notes and the Additional C Notes shall be issued at the request of the Company and shall be allocated as follows:

(i)    Alex Snow may subscribe for up to £2,000,000 of the Additional B Notes and the Additional C Notes (in aggregate across both tranches);

(ii)   subject to paragraph (i) above, the Relevant Purchasers may subscribe for their pro rata proportion of the Additional B Notes and/or the Additional C Notes. To the extent that any Relevant Purchaser does not exercise its right in full to subscribe for Additional B Notes or Additional C Notes, its remaining pro rata share may be taken up by the other Relevant Purchasers; and

(iii)  if the amount of Additional B Notes or Additional C Notes subscribed for by Alex Snow and each Relevant Purchaser as described above is less than the aggregate issuance amount of the Additional B Notes or the Additional C Notes, the Company may offer the unallocated balance of the Additional B Notes or Additional C Notes to any third party, save that in the case of any issuance of Additional C Notes, such offer of Additional C Notes to third parties is subject to the unanimous consent of the Additional A Note Purchasers.

A portion of the principal amount of the Additional A Notes (such portion as would result upon Conversion in the Note Purchasers collectively holding 29.9 per cent. of the issued share capital of the Company, including any existing shareholdings, Warrants and accounting for the cashless exercise of the Warrants) have unconditional rights to convert into Ordinary Shares at the Conversion Price.

The balance of the Loan Notes have conditional rights to convert into Ordinary Shares at a conversion price of £0.008 per Ordinary Share (being the resulting nominal value of the Ordinary Shares following the Sub-division), subject to and conditional upon the satisfaction of the Conversion Conditions, being the passing of the Resolutions by the Shareholders and the grant of the Rule 9 Waiver by the Takeover Panel.

The Loan Notes are redeemable at 1.25 times their par value. The Loan Notes have a maturity date of 26 January 2023, which is the date falling 364 days following the date of issuance of the Original Notes. The Loan Notes are redeemable (i) on the maturity date, and (ii) at the election of the Noteholders, on a pro rata basis, in an amount equal to any cumulative net proceeds the Company receives following the completion of any share issuance by the Company or a member of the Group (other than to another member of the Group, or as a result of the exercise of the Warrants, or pursuant to the Conversion), material asset sale by the Company or a member of the Group or a recapitalisation of the Company or a member of the Group exceeding £2 million. The Loan Notes may be redeemed by the Company on a voluntary basis (i) by giving not less than ten Business Days' notice, and (ii) at the request of a Noteholder (in respect of its Loan Notes) upon the earliest of the sale of all or substantially all of the assets of the Group or a Change of Control (as defined in the Amended and Restated Note Purchase Agreement) of the Company. 

The proceeds of the issue of the Additional Notes may only be used for costs associated with maintaining the Company's operations in order to enable the formulation and execution of a restructuring and financing plan.

The Company issued the Original Notes to the Original Purchasers and received cash proceeds of £5,950,000 on 28 January 2022. The Company issued the Additional A Notes to the Additional A Note Purchasers and received cash proceeds of £6,000,000 on 22 April 2022.

Security

The Loan Notes represent senior ranking obligations of the Company and are secured on a first and second priority basis and guaranteed and secured by certain members of the Group. The security consists of, amongst others, first and second ranking fixed and floating security over substantially all of the assets (subject to certain agreed exceptions) of those members of the Group.

Warrants

Under the terms of the Amended and Restated Note Purchase Agreement, the Company also agreed to issue to the Note Purchasers Warrants to subscribe for up to 29,169,448 Ordinary Shares (representing approximately 17.52 per cent. of the Company's issued share capital as at the Last Practicable Date) as follows:

(a)   Warrants to subscribe for 8,239,950 Ordinary Shares (representing approximately 4.95 per cent. of the Company's issued share capital as at the Last Practicable Date), which were issued pro rata to the Original Purchasers on issue of the Original Notes;

(b)   Warrants to subscribe for 12,689,541 Ordinary Shares (representing approximately 7.62 per cent. of the Company's issued share capital as at the Last Practicable Date), which were issued pro rata to the Original Purchasers in connection with the Original Notes, subject to certain conditions as set out in the Amended and Restated Note Purchase Agreement; and

(c)   Warrants to subscribe for 8,239,957 Ordinary Shares (representing approximately 4.95 per cent. of the Company's issued share capital as at the Last Practicable Date), which were issued pro rata to the Additional A Note Purchasers on issue of the Additional A Notes.

Each Warrant is exercisable at the Warrant Exercise Price at any time from the date of issue of the Warrant until 5.00 p.m. on 15 January 2025. The Warrants are subject to the terms of the Amended and Restated Warrant Instrument, further details of which are set out in Section B of Part II (Details of the Strategic Financing) of the Circular.

As at the date of this Announcement, the Company has issued all of the Warrants to subscribe for all 29,169,448 Ordinary Shares to the Note Purchasers. The Warrants were issued utilising the authorities and powers approved by Shareholders at the Company's 2021 AGM and at the Last General Meeting. However, pursuant to the terms of the Amended and Restated Warrant Instrument and the Amended and Restated Note Purchase Agreement, the Warrant Exercise Price will, subject to and conditional upon completion of the Sub-division, be reduced from £0.10 per Ordinary Share to £0.008 per Ordinary Share. Accordingly, the subscription rights attaching to the Warrants have changed and the Directors are therefore re-seeking the ratification and approval of the Shareholders to issue the Warrants pursuant to the terms of the Amended and Restated Warrant Instrument and to dis-apply the statutory pre-emption rights in connection with such issue.

Board Observer Right

Sand Grove have appointed Fadi Chamsy as an observer to the Board pursuant to their existing right under the Original Note Purchase Agreement.

The Additional Note Purchasers have appointed William Grant of Gatemore as an observer to the Board pursuant to their right under the Amended and Restated Note Purchase Agreement.

7.           Sub-division of Ordinary Shares

The Company is required under the terms of the Amended and Restated Note Purchase Agreement to seek Shareholder approval for the Sub-division, which requires an ordinary resolution to be passed.

Pursuant to the terms of the Amended and Restated Note Purchase Agreement, the Directors are seeking the approval of the Shareholders to effect the Sub-division, such that each of the 166,464,335  ordinary shares of £0.10 each in the capital of the Company will be sub-divided and re-designated into one ordinary share of £0.008 each in the capital of the Company and one deferred share of £0.092 each in the capital of the Company (the "New Ordinary Shares"), having the rights and being subject to the restrictions set out in the Revised Articles. Following completion of the Sub-division, the Loan Notes will have rights to convert into Ordinary Shares at a conversion price of £0.008 per Ordinary Share and the Warrants will be exercisable at a Warrant Exercise Price of £0.008 per Ordinary Share (being the resulting nominal value of the Ordinary Shares following the Sub-division).

No new share certificates will be issued in respect of the New Ordinary Shares as existing share certificates will remain valid in respect of the same number of New Ordinary Shares arising from the Sub-division. The number of ordinary shares of the Company will not change as a result of the Sub-division.

8.           Asset Purchase Option

If the Conversion Conditions (including the passing of the Resolutions) are not satisfied in full or waived by 9 July 2022, the Relevant Purchasers will have the right to exercise (at their sole election (acting together)) the Asset Purchase Option. Upon exercise of the Asset Purchase Option, the Company will be required to transfer all of the material assets of the Group (including the Strategic Research Agreements and other data collaboration agreements) to Sensyne Holdings UK and transfer to the Relevant Purchasers the entire issued share capital of Sensyne Holdings UK for consideration of (i) the sum of £1 and (ii) the assumption by the Relevant Purchasers of all the Company's outstanding obligations in respect of the Loan Notes.

The implementation of the Asset Purchase Option will constitute a fundamental change of business within the meaning of Rule 15 of the AIM Rules for Companies. Accordingly, if exercised, the Asset Purchase Option will be conditional upon the passing of an ordinary resolution of the Shareholders in accordance with Rule 15 of the AIM Rules for Companies at a subsequent general meeting of the Company. The Company has received irrevocable undertakings in respect of 48,572,586 Ordinary Shares (representing approximately 29.18 per cent. of the Company's issued share capital as at the Last Practicable Date) to vote in favour of any resolution to approve the Asset Purchase Option. Additionally, the Relevant Purchasers, who have undertaken in the Amended and Restated Note Purchase Agreement to vote in favour of any resolution to approve the Asset Purchase Option, hold 23,328,875 Ordinary Shares (representing approximately 14.01 per cent. of the Company's issued share capital as at the Last Practicable Date). The Relevant Purchasers can exercise the Warrants at their discretion and will therefore be able to secure the passing of any resolution to approve the Asset Purchase Option if the Conversion Conditions are not satisfied in accordance with the terms of the Amended and Restated Note Purchase Agreement.

9.           General Meeting

The General Meeting of the Company, notice of which is set out at the end of the Circular, is to be held at the offices of Covington & Burling LLP, 22 Bishopsgate, London EC2N 4BQ at 11.00 a.m. on 6 June 2022. The General Meeting is being held for the purpose of considering and, if thought fit, passing the following resolutions:

Resolution 1 - an ordinary resolution to grant authority to sub-divide and re-designate each existing ordinary share of £0.10 in the capital of the Company into one new ordinary share of £0.008 and one deferred share of £0.092 in the capital of the Company.

Resolution 2 - a special resolution to approve the amendment of the Articles to include the rights of the Deferred Shares following the Sub-division and as set out in the Revised Articles.

Resolution 3 - an ordinary resolution to authorise the Directors to grant rights to convert the Loan Notes into Ordinary Shares at a conversion price of £0.008 per ordinary share up to an aggregate nominal amount of £26,350,000.

Resolution 4 - a special resolution to empower the Directors to dis-apply statutory pre-emption rights in respect of the grant of rights to convert the Loan Notes into Ordinary Shares, provided that such power shall be limited to an aggregate nominal amount of £26,350,000.

Resolution 5 - an ordinary resolution to authorise the Directors to issue the Warrants to subscribe for up to 29,169,448 ordinary shares of £0.008 each.

Resolution 6 - a special resolution to empower the Directors to dis-apply statutory pre-emption rights in respect of the issue of the Warrants described in resolution 5 above.

Resolution 7 - an ordinary resolution of the Independent Shareholders to approve the waiver granted by the Takeover Panel under Rule 9 which would otherwise apply to the Concert Party (or such other persons as determined by the Takeover Panel) as a result of the issue to them of Ordinary Shares pursuant to the Conversion and/or the exercise of the Warrants.

Resolution 8 - a special resolution, in accordance with Rule 41 of the AIM Rules for Companies, for the cancellation of the admission to trading on AIM of the Ordinary Shares.

Resolution 9 - a special resolution that the Company be re-registered as a private company.

Resolution 10 - a special resolution to adopt the New Articles upon the Re-registration, in substitution for, and to the exclusion of, the existing articles of association (which at that time will be the Revised Articles) to reflect the Company's Delisting and status as a private limited company.

Please note that this is not the full text of the Resolutions and you should read this section in conjunction with the Resolutions contained in the Notice of General Meeting in Part IV (Notice of General Meeting) of the Circular. You should also note that certain of the Resolutions are conditional upon the passing of other Resolutions.

10.          Takeover Code and Rule 9 Waiver Resolution

The Strategic Financing gives rise to certain considerations under the Takeover Code. The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code applies to all offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man. The Takeover Code also applies to all offers for companies (both public and private) which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man which are considered by the Takeover Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions is met - for example, if the company's shares were admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding ten years.

(a)   Application of the Takeover Code

The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest in shares (as defined in the Takeover Code) which when taken together with shares already held by him/her or held or acquired by persons acting in concert with him/her, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code is normally required to make an offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of the voting rights of the company, an offer will normally be required if any further interests in shares carrying voting rights are acquired by such person or any person acting in concert with that person.

An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Accordingly, pursuant to Rule 9 of the Takeover Code, if the Board were to allot and issue Ordinary Shares to the Noteholders upon Conversion and/or issue upon the exercise of Warrants, resulting in an increase to the percentage of the voting rights which the Concert Party controls; the Concert Party may be required to make a general cash offer to all other Shareholders of the Company to acquire their Ordinary Shares, unless such obligation has been waived by the Takeover Panel.

Part III (Additional Information) of the Circular sets out certain further information and financial information respectively that is required to be disclosed in the Circular pursuant to the rules contained in the Takeover Code.

(b)   Information on the Concert Party

The Company has agreed with the Takeover Panel that each of the entities listed in the table below are acting in concert in relation to the Company (together the "Concert Party"). As at the Last Practicable Date, members of the Concert Party have an interest in the Ordinary Shares equating to an aggregate of 20.64 per cent. of the issued share capital of the Company.

Further information on the Concert Party is set out in Part III (Additional Information) of the Circular.

(c)   Details of the maximum controlling position

(i) Conversion of the Original Notes and the Additional A Notes and exercise of the Warrants

Assuming that the members of the Concert Party will, at the earliest opportunity (which would be following the passing of the Resolutions at the General Meeting to be held on 6 June 2022), convert in full the Original Notes and the Additional A Notes and exercise in full the Warrants (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the Company), the members of the Concert Party would be interested in 1,540,588,471 shares, representing approximately 89.40% of the enlarged voting rights of the Company. A table showing the respective individual interests in shares of the members of the Concert Party following the Conversion of the Original Notes and the Additional A Notes and the exercise of the Warrants is set out below:

Following Conversion of the Original Notes and the Additional A Notes in full, the Concert Party would hold Ordinary Shares carrying over 50 per cent. of the voting rights of the Company and (for so long as they continue to be acting in concert) may accordingly increase their aggregate interests in shares without incurring any obligation to make an offer under Rule 9, although individual members of the Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Takeover Panel consent.

(ii) Conversion of the Original Notes and the Additional Notes and exercise of the Warrants

The allocation of the Additional B Notes and the Additional C Notes is not yet determined. For illustrative purposes only, the Company has assumed that Alex Snow will subscribe for the entire £2 million in principal amount of loan notes for which he is entitled to subscribe and that the other members of the Concert Party shall subscribe pro rata in accordance with the Amended and Restated Note Purchase Agreement. Based on this illustrative model and assuming that the members of the Concert Party will, at the earliest opportunity (which would be following the passing of the Resolutions at the General Meeting to be held on 6 June 2022), convert in full the Original Notes and the Additional Notes and exercise in full the Warrants (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the Company), the members of the Concert Party would be interested in 3,290,588,468 shares, representing approximately 94.74% of the enlarged voting rights of the Company. A table showing the respective individual interests in shares of the members of the Concert Party following the Conversion of the Original Notes and the Additional Notes and the exercise of the Warrants is set out below:

Following Conversion of the Original Notes and the Additional Notes in full and following the exercise of the Warrants in full, the Concert Party would hold Ordinary Shares carrying over 50 per cent. of the voting rights of the Company and (for so long as they continue to be acting in concert) may accordingly increase their aggregate interests in shares without incurring any obligation to make an offer under Rule 9, although individual members of the Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Takeover Panel consent.

(d)   Rule 9 Waiver and the Rule 9 Waiver Resolution

The Conversion and the exercise of the Warrants would normally trigger an obligation for an offer to be made under Rule 9. However, in order to enable the Company to effect the Strategic Financing without triggering a mandatory offer obligation for the Concert Party, the Company has consulted with the Takeover Panel and the Takeover Panel has agreed to waive the requirement for an offer to be made in respect of the Conversion and the exercise of the Warrants (the "Rule 9 Waiver"). This Rule 9 Waiver is subject to the approval by a vote of Independent Shareholders of the Company on a poll at the General Meeting. The Rule 9 Waiver Resolution seeks this approval. Gatemore, Lansdowne, Sand Grove are not considered to be independent, and will not be entitled to vote on the Rule 9 Waiver Resolution. Accordingly, should Independent Shareholders approve the Rule 9 Waiver Resolution, the Takeover Panel will be waiving the requirement for the Concert Party to make a mandatory general offer under Rule 9 of the Takeover Code as a result of the exercise allotment and issue of Ordinary Shares upon Conversion and/or upon the exercise of the Warrants.

11.  AIM Delisting

The Company is required under the terms of the Amended and Restated Note Purchase Agreement to seek Shareholder approval for the AIM Delisting, which requires a special resolution to be passed in accordance with Rule 41 of the AIM Rules for Companies. The Delisting Resolution is set out at resolution 8 in the Notice of General Meeting included in the Circular.

In the event that the Delisting Resolution is passed, the Board will resolve to cancel the admission of the Ordinary Shares to trading on AIM. Pursuant to Rule 41 of the AIM Rules, the Company, through its nominated adviser, Peel Hunt, has notified the London Stock Exchange of the proposed Cancellation. Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of the Cancellation. Additionally, Cancellation will not take effect until at least five clear Business Days have passed following the passing of Resolution 8. If Resolution 8 is passed at the General Meeting, it is proposed that the last day of trading in the Ordinary Shares on AIM will be 17 June 2022 and that the Cancellation will become effective following the issue of a Dealing Notice, at 7.00 a.m. on 20 June 2022.

The effect of the AIM Delisting

If the Resolutions are passed at the General Meeting, Shareholders will no longer be able to buy and sell Ordinary Shares on AIM after 17 June 2022 and the Board does not intend to apply for admission of the Ordinary Shares to any other market and, therefore, no trading facility will be available to Shareholders after this date.

Following the AIM Delisting taking effect, the Company will no longer be subject to the AIM Rules for Companies or be required to retain the services of a nominated adviser. The Company will also no longer be subject to the QCA Corporate Governance Code or be required to comply with the continuing obligations set out in the DTRs or, provided the Company's securities remain outside the scope of the regulation, UK MAR. In addition, the Company and its Shareholders will no longer be subject to the provisions of the DTRs relating to the disclosure of changes in significant shareholdings in the Company. As a company incorporated in England and Wales, the Company will continue to be subject to the requirements of the Companies Act 2006. Furthermore, whilst the composition of the Board will remain unchanged for the period up to the AIM Delisting taking effect, it is expected that the Board will undergo a restructuring to reduce costs and align skills with those required of an unquoted company.

12.  Re-registration

As a result of the Strategic Financing and Delisting, it is proposed to re-register the Company as a private limited company. The principal effects of the Re-registration on the rights and obligations of Shareholders and the Company are summarised in Appendix B of the Circular.

The Re-registration requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

Subject to, and conditional upon, the AIM Delisting and the passing of Resolutions 8 and 9, application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will not issue the certificate of incorporation on Re-registration until the Registrar of Companies is satisfied that no valid application can be made to cancel the resolution to re-register the Company as a private limited company.

If Resolution 8 and Resolution 9 are passed at the General Meeting, it is anticipated that the Re-registration will become effective on or around 4 July 2022.

Application of the Takeover Code following the AIM Delisting and the Re-registration

The Takeover Code applies to all offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man.

The Takeover Code also applies to all offers for companies (both public and private) which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man which are considered by the Takeover Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions is met - for example, if the company's shares were admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding ten years.

Following the AIM Delisting and the Re-registration, the Takeover Code will continue to apply for  a period of ten years from the AIM Delisting provided that the Company is considered by the Takeover Panel to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the "residency test". The way in which the test for central management and control is applied for the purposes of the Takeover Code may be different from the way in which it is applied by the United Kingdom tax authorities, HMRC. Under the Takeover Code, the Takeover Panel looks to where the majority of the Directors are resident, amongst other factors, for the purposes of determining where the Company has its place of central management and control.

Based on the current composition of the Board, the residency test will be satisfied and the Takeover Code will continue to apply to the Company following the AIM Delisting and the Re-registration. However, the Takeover Code could cease to apply to the Company in the future if any changes to the Board composition result in the majority of the Directors not being resident in the United Kingdom, Channel Islands and Isle of Man.

When the Takeover Code ceases to apply to the Company in the future, Shareholders will not receive the protections afforded by the Takeover Code in the event that there is a subsequent offer to acquire their Sensyne shares. This includes the requirement for a mandatory cash offer to be made if either:

(i)         a person acquires an interest in shares which, when taken together with the shares in which persons acting in concert with it are interested, increases the percentage of shares carrying voting rights in which it is interested to 30% or more; or

(ii)         a person, together with persons acting in concert with it, is interested in shares which in the aggregate carry not less than 30% of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights and such person, or any person acting in concert with it, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which it is interested.

Brief details of the Takeover Panel, the Takeover Code and the protections given by the Takeover Code are described below.

Before giving your approval to the AIM Delisting and the Re-registration, you may want to take independent professional advice from an appropriate independent financial adviser.

The Takeover Code

The Takeover Code is issued and administered by the Takeover Panel. Sensyne Health plc is a company to which the Takeover Code applies and its Shareholders are accordingly entitled to the protections afforded by the Takeover Code.

The Takeover Code and the Takeover Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror. The Takeover Code also provides an orderly framework within which takeovers are conducted. In addition, it is designed to promote, in conjunction with other regulatory regimes, the integrity of the financial markets.

The General Principles and Rules of the Takeover Code

The Takeover Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. For your information, these General Principles are set out in Part 1 of Appendix A to the Circular. The General Principles apply to all transactions with which the Takeover Code is concerned. They are expressed in broad general terms and the Takeover Code does not define the precise extent of, or the limitations on, their application. They are applied by the Takeover Panel in accordance with their spirit to achieve their underlying purpose.

In addition to the General Principles, the Takeover Code contains a series of Rules, of which some are effectively expansions of the General Principles and examples of their application and others are provisions governing specific aspects of takeover procedure. Although most of the Rules are expressed in more detailed language than the General Principles, they are not framed in technical language and, like the General Principles, are to be interpreted to achieve their underlying purpose. Therefore, their spirit must be observed as well as their letter. The Takeover Panel may derogate or grant a waiver to a person from the application of a Rule in certain circumstances.

Giving up the protection of the Takeover Code

A summary of key points regarding the application of the Takeover Code to takeovers generally is set out in Part 2 of Appendix A to the Circular. You are encouraged to read this information carefully as it outlines certain important protections which you will be giving up if you agree to the AIM Delisting and the Re-registration and the Company subsequently ceases to be subject to the Takeover Code in the future.

14.  UK tax treatment

Investors may choose to hold AIM-quoted shares because they are classed as unlisted/unquoted securities which may qualify individuals who are UK tax resident and UK domiciled for relief from inheritance taxation and certain other preferential tax benefits. The Company cannot and does not provide any form of taxation advice to Shareholders and therefore Shareholders are strongly advised to seek their own taxation advice to confirm the consequences of continuing to hold Ordinary Shares and Deferred Shares that are not admitted to trading on AIM.

The following summary does not constitute legal or tax advice and is not exhaustive. Therefore, the following should not be relied upon by Shareholders without taking further advice (and the Company accepts no liability in respect of any such reliance on any information provided herein on taxation matters).

The AIM Delisting

The AIM Delisting should not prevent the Ordinary Shares and the Deferred Shares from qualifying as unlisted/unquoted securities for the purposes of certain specific UK tax rules (notably, the UK inheritance tax business property relief rules).

Subject to certain conditions, transfers of ordinary shares admitted to trading on AIM are not subject to UK stamp duty or SDRT. However, following the AIM Delisting, stamp duty or SDRT will generally apply to transfers of, or agreements to transfer the Ordinary Shares or Deferred Shares (normally being 0.5% of the consideration).

The Sub-division

Based on current UK tax legislation, the Sub-division should not be treated as a disposal for the purposes of UK taxation of chargeable gains. After the Sub-division of the Existing Ordinary Shares, the base cost of the Existing Ordinary Shares for the purposes of UK taxation of chargeable gains should be apportioned between the resulting Ordinary Shares and Deferred Shares.

It is strongly recommended that Shareholders obtain appropriate professional advice in respect of their tax position in respect of the AIM Delisting and the Sub-division.

15.          Additional information

The attention of Shareholders is drawn to the information contained in Part II (Details of the Strategic Financing) and Part III (Additional Information) of the Circular, which provide additional information on the Amended and Restated Note Purchase Agreement, the Amended and Restated Warrant Instrument, the Security Agreements and the Company.

16.  Irrevocable undertakings

As at the Last Practicable Date, the Company has received voting irrevocable undertakings from the following Shareholders to vote in favour of the Resolutions:

(a)   Lord Paul Drayson in respect of 20,103,384 Ordinary Shares (representing approximately 12.08 per cent. of the Company's issued share capital as at the Last Practicable Date); and

(b)   Lady Elspeth Drayson in respect of 17,444,569 Ordinary Shares (representing approximately 10.48 per cent. of the Company's issued share capital as at the Last Practicable Date).

As at the Last Practicable Date, the Company has received voting irrevocable undertakings from the following Shareholders to vote in favour of the Resolutions (excluding the Rule 9 Waiver Resolution):

(c)   Sand Grove Capital Management LLP on behalf of Sand Grove Opportunities Master Fund Ltd in respect of 11,024,633 Ordinary Shares (representing approximately 6.62 per cent. of the Company's issued share capital as at the Last Practicable Date).

As at the date of this Announcement, the Company has therefore obtained irrevocable undertakings, in aggregate, to vote in favour of:

(i) the Resolutions in respect of 37,547,953 Ordinary Shares (representing approximately 22.56 per cent. of the Company's issued share capital as at the Last Practicable Date); and

(ii) the Resolutions (excluding the Rule 9 Waiver Resolution) in respect of 48,572,586 Ordinary Shares (representing approximately 29.18 per cent. of the Company's issued share capital as at the Last Practicable Date).

The irrevocable undertakings cease to be binding and shall lapse if the General Meeting is not held before 31 July 2022.

Additionally, the Relevant Purchasers, who have undertaken in the Amended and Restated Note Purchase Agreement to vote in favour of the Resolutions (excluding the Rule 9 Waiver Resolution), hold 23,328,875 Ordinary Shares (representing approximately 14.01 per cent. of the Company's issued share capital as at the Last Practicable Date).  

The Company has received total commitments in respect of 71,901,461 Ordinary Shares (representing approximately 43.19 per cent. of the Company's issued share capital as at the Last Practicable Date) to vote in favour of the Resolutions (including from irrevocable undertakings, plus undertakings given under the Amended and Restated Note Purchase Agreement).

17.          Recommendation

As described in paragraph 2 - Background to and reasons for the Strategic Financing, the Company did not receive an offer under the FSP, nor was it successful in raising alternative sources of capital and, consequently, the Company entered into the Amended and Restated Note Purchase Agreement in order to continue trading.

The Independent Directors consider that the Strategic Financing and the passing of the Resolutions to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Independent Directors unanimously recommend that Shareholders vote in favour of all of the Resolutions. Alex Snow, who is a member of the Concert Party and who has been appointed to the Board as Chief Executive Officer to implement the restructuring and refocusing plan pursuant to the Amended and Restated Note Purchase Agreement, has a conflict of interest and accordingly has taken no part in the recommendation of the Board in connection with the Resolutions. The Directors who are Shareholders intend, in respect of their own beneficial shareholdings, to vote in favour of the Resolutions.

The Independent Directors, having been so advised by Peel Hunt, consider that the Rule 9 Waiver Resolution is fair and reasonable and in the best interests of Shareholders and the Company as a whole. In providing this advice, Peel Hunt has taken into account the Independent Directors' commercial assessments. Consequently, the Independent Directors recommend that Independent Shareholders vote in favour of the Rule 9 Waiver Resolution as they intend to do in respect of their own beneficial holdings, which amounts in aggregate to 83,332 Ordinary Shares (representing approximately 0.05 per cent. of the existing issued share capital of the Company held by the Independent Shareholders).

If Shareholders do not approve the Resolutions, the Relevant Purchasers will be able to exercise the Asset Purchase Option under the Amended and Restated Note Purchase Agreement and will be able to require the transfer of all material assets of the Group (including the Strategic Research Agreements and other data collaboration agreements) to be transferred into Sensyne Holdings UK, and to then purchase the entire issued share capital of Sensyne Holdings UK for consideration of (i) the sum of £1 and (ii) the assumption by the Relevant Purchasers of all the Company's outstanding obligations in respect of the Loan Notes.  

-ENDS-

Notes for editors:

About Sensyne Health: https://www.sensynehealth.com/

Sensyne Health plc (LSE: SENS) is a clinical artificial intelligence company operating a unique business model - a for-profit plc making a positive social impact, sharing the financial returns it makes with health systems.  The company applies clinical AI in the healthcare and life science industries. In healthcare, Sensyne delivers remote patient monitoring and real-time decision-making systems for healthcare organisations and their patients. In life sciences, Sensyne analyses large complex anonymised data sets to help life sciences companies accelerate the development of new medicines.

Sensyne is listed on the AIM Market of the London Stock Exchange (SENS).

Contacts

Sensyne Health

Alex Snow, Chief Executive Officer

Richard Pye, Chief Financial Officer

+44 (0) 330 058 1845

Peel Hunt LLP (Nominated Adviser and Broker)

+ 44 (0) 20 7418 8900

Dr Christopher Golden

James Steel

Consilium Strategic Communications

Mary-Jane Elliott

Jessica Hodgson

CSCSensynehealth@consilium-comms.com

+44 (0) 7780 600290

APPENDIX I - EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes

1.     Each of the times and dates set out in the above timetable and mentioned in this Announcement is subject to change by the Company, in which event details of the new times and dates will be notified to London Stock Exchange plc and the Company will make an appropriate announcement to a Regulatory Information Service.

2.     References to times in this Announcement are to London time unless otherwise stated

3.     If you have questions on how to complete the Form of Proxy, please contact Equiniti Limited on 0371 384 2030 or, if calling from outside the United Kingdom, +44 (0)121 415 7047 Lines are open from 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday (except English and Welsh public holidays).

APPENDIX II - DEFINITIONS

The following definitions apply throughout this Announcement, unless the context requires otherwise: