TIDMADME
RNS Number : 3147T
ADM Energy PLC
14 November 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
14 November 2023
ADM Energy PLC
("ADM" or the "Company")
Financing Update and Debt and Asset Restructuring
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a
natural-resources investing company, provides the following update
in respect of its financing, debt and asset restructuring exercise
("the Restructuring") that has been supported by its major
shareholders.
Highlights
-- OFX Holdings, LLC, ("OFXH") a substantial shareholder, has
supported the Company as it completes further agreements with trade
creditors, resulting in significantly reduced liabilities.
-- As a result of the transactions described herein, total debt
has been reduced by approximately GBP1.1 million in combination of
discounted debt settlements and equity transactions.
o Total reduction to original value of debt of GBP432,100
resulting in increase in net asset value for benefit of
shareholders.
o GBP204,918 in debt reduction related to amendments to Blade
Oil V, LLC transaction originally announced 25 May 2023.
o Remainder of debt settled as to GBP125,760 in cash and
GBP346,650 by issuance of 27,885,000 ordinary shares.
-- Further to the announcement of 25 May 2023 regarding
subscriptions for the Secured Convertible Loan Note ("SCLN") issued
by ADM Energy (USA), Inc. for US$900,000, US$425,000 has now been
received in cash with the balance of funds expected over next 90
days.
-- Terms of the SCLN have been amended (further details below)
to attract additional capital to advance the business development
objectives of the Company and to allow proceeds to be used in wider
applications.
-- OFXH, pursuant to its existing loan agreements, advanced an
additional net US$70,000 in cash to the Company in the second half
of 2024. In order to focus on the Altoona lease, part of the Blade
Oil V, LLC ("Blade V") investment announced on 25 May 2023, the
Company has returned the Texas and Kansas leases included in the
Blade V investment, resulting in a reduction of US$406,850 of total
maximum consideration associated with the transaction including
US$250,000 (circa GBP205,000) of the total debt reductions
announced in this RNS.
Debt Restructuring
The debt restructuring exercise carried out by the Company
comprises the following component parts:
i) Settlement of Certain Trade Creditors
The Company has entered into agreements to settle GBP709,280
original value of certain outstanding trade and other creditors for
GBP369,570 of which GBP101,170 has been paid in cash with
GBP147,750 remaining to be paid in installments over time and the
issuance of 12,065,000 ordinary shares (the "Settlement Shares")
resulting in a reduction of creditors of GBP339,710 or 48% of the
original value settled (the "Trade Creditor Settlement").
ii) Debt restructuring with OFX Holdings, LLC
Amendment to Blade Oil V, LLC Acquisition
Further to the announcement of the acquisition of Blade V on 25
May 2023, the Company has agreed with OFXH to amend the terms of
the transaction in order for it to focus on developing cash
generating assets as a priority. The amendments to the Blade V
transaction are as follows:
a) The Company will retain the interest in the Altoona lease;
b) The interest in the Texas and Kansas leases are reassigned to the Seller;
c) The following adjustments are made to the Total Maximum
Consideration (as defined in the RNS dated 25 May 2023):
1. The Seller (OFX Holdings, LLC) will cancel US$250,000.00 in
debt obligations owed to it by the Company;
2. The Seller will terminate US$150,000.00 of the Contingent Payment; and,
3. The Company and Seller have agreed to terminate 7 million 2-year, 2.5p warrants.
As a result of the changes to the Blade V investment, the total
maximum consideration associated with the transaction reduces from
US$1,614,000 to US$1,207,160. Further, given this reduction, the
Company is in discussions with OFXH regarding the possible
investment in a company operating in the oil and gas technology
sector which the Company considers has greater short term cash
generation prospects than the returned leases.
Further Debt Settlement of OFX Holdings, LLC Loans
Additionally, the Company and OFXH have agreed to discount and
restructure US$275,720 of loans due to OFXH (the "Debt Conversion
Settlement") as follows:
a) Issue 15,820,000 ordinary shares (the "Conversion Shares") at
a nominal value of 1p per share;
b) Issue 7,910,000 3-year, 1.5p warrants.
The Debt Conversion Settlement has been undertaken on the same
terms as other creditor settlements and, in the event of a change
to the terms of the settlement, all converting creditors will be
treated equally.
Other Disclosures Related to OFX Holdings, LLC
-- In the second half of 2023, under the terms of its existing
loan agreements, OFXH advanced a net US$70,000 in cash to the
Company, and forgave US$60,000 in short-term loans, to partially
fund the creditor settlements described above and for general
working capital purposes.
-- OFXH has funded US$125,000 toward its US$250,000 commitment
to the Secured Convertible Loan Note announced 25 May 2023 and has
reaffirmed its commitment to fund the remaining US$125,000 within
90 days.
-- As part of these negotiations and in light of funding for the
Company coming from OFXH, OFXH has settled approximately GBP102,000
in creditors on behalf of the Company via the assignment of
20,400,000 shares held by OFXH to the creditor on behalf of the
Company.
-- As consideration for monies advanced by OFXH to help the
Company fund the Trade Creditor Settlement, the Company and OFXH
agreed to a US$35,000 Creditor Restructuring Fee to be capitalised
and added to the amount due and the award to OFXH of 26.5 million
3-year, 1.5p warrants.
-- The Company and OFXH are working on additional transactions
related to settlement of debt owed to OFXH, the assets in which the
Company and OFXH share ownership and other assets and business
interests owned by OFXH.
Consolidation of OFXH Loans
Following the reorganisation noted above, the Company has
remaining outstanding loan advances due to OFXH of US$337,500 (the
"OFXH Loans"). The Company and OFX have agreed that the OFXH Loans
will be consolidated into a new loan facility (the "Consolidated
Loan") to replace all previous loan facilities with OFXH. The key
terms of the new loan facility are:
Borrower: ADM Energy (USA), Inc.
Maturity: 31 December 2025
Interest Rate: 15.0% per annum
Payments: Monthly amortisation, in arrears starting February
2024.
The other terms of the Consolidated Loan remain in line with the
OFXH Loans as previously announced.
iii) Amendments to the Secured Convertible Loan Note
On 25 May 2023, the Company announced that it had received
subscriptions for the SCLN totalling US$900,000 which would be
settled in due course. Of the total amount subscribed for, the
Company has received a total of US$425,000 in gross proceeds to
date and expects to receive the balance subscribed for within
ninety days. Only the SCLNs that have been paid for have been
issued.
The terms of the SCLN, which have previously been announced,
have been amended by mutual agreement between the Company and
holders of the SCLN pursuant to the original terms of the SCLN, as
follows:
a) The requirement to use 100.0% of the proceeds to fund
development of the Altoona lease has been replaced with the
following:
a. The Company must use a minimum of 50.0% of the gross proceeds
from the SCLN to fund development of projects held by or
investments in the business interests of ADM Energy (USA), Inc.
b. The Company may use up to 30.0% of the gross proceeds from
the SCLN to fund general working capital requirements of the
Company.
c. The Company may use up to 20.0% of the gross proceeds from
the SCLN for debt repurchased at, at least, a 50% discount.
b) The Interest rate has been increased from 8.0% to 15.0% per
annum to align it with the Consolidated Loan.
c) The equity conversion price has been lowered from 1.2p per share to 1.0p per share.
d) The 1.25% over-ride royalty interest to be granted in the
Altoona lease has been replaced by a 10.0% net profits interest in
the pre-tax profits of ADM Energy (USA), Inc.
The restructuring of the SCLN has occurred as a result of the
Company's focus on debt reorganisation and short term cash and
value generation, which includes the change in the Blade V assets
and potential further investment. The Board of Directors of the
Company believe that the amended terms of the SCLN will enable the
Company to attract additional capital to further the projects and
investment objectives of the Company while providing flexibility to
the Company in managing its working capital and other
obligations.
Restructuring Fee
Ventura Energy Advisors, LLC, ("VEA") a related party of OFX
Holdings, LLC, is to be paid a US$50,000.00 restructuring fee
("Restructuring Fee") in conjunction with its services related to
the creditor restructuring transactions described above. The
Restructuring Fee will be paid by issuance to VEA of US$50,000 in
Secured Convertible Loan Notes.
Related Party Transactions
As part of the Restructuring, various agreements with OFXH noted
above have been entered into or amended including, inter alia, the
amendment to the Blade V investment, the Debt Conversion
Settlement, settlement of creditors on the Company's behalf, the
Restructuring Fee, Creditor Restructuring Fee, the Consolidated
Loan and the issue of warrants constitute related party
transactions for the purposes of AIM Rule 13. The Company's
Directors consider, having consulted with the Company's nominated
adviser, Cairn Financial Advisers LLP, that the terms of the
transactions are fair and reasonable insofar as the Company's
shareholders are concerned.
The SCLN has been subscribed to by OFXH and Hessia Group Limited
(both substantial shareholders) and Oliver Andrews and Stefan
Olivier (a former and current director respectively) and,
accordingly the amendment the SCLN constitutes a related party
transaction for the purposes of AIM Rule 13. The Company's
Directors consider, having consulted with the Company's nominated
adviser, Cairn Financial Advisers LLP, that the terms of the
transaction are fair and reasonable insofar as the Company's
shareholders are concerned.
Admission to AIM and Total Voting Rights
Application has been made for the Settlement Shares, Conversion
Shares and Award Shares, which total 27,885,000 new ordinary shares
and which will rank pari passu with the Company's existing ordinary
shares, to be admitted to trading on AIM ("Admission"). It is
expected that Admission of the New Ordinary Shares will become
effective and that dealings will commence at 08.00 am on or around
17 November 2023.
Following Admission, the Company's enlarged issued share capital
("Enlarged Issued Share Capital") will comprise 397,673,614
ordinary shares of GBP0.01 each with voting rights in the Company.
This figure may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change in the
interest in, the share capital of the Company under the FCA's
Disclosure and Transparency Rules.
Following issuance of the Conversion Shares, OFX will hold
34,551,334 ordinary shares of ADM Energy plc representing 8.7% of
the Enlarged Issued Share Capital of the Company on Admission.
Stefan Olivier, CEO of ADM Energy, commented , "The transactions
announced today are significant for the Company and its
shareholders as they result in over GBP1 million of debt reduction
and a direct increase in net asset value for benefit of
shareholders. The support demonstrated by our large shareholders,
Hessia Group Limited and OFXH, in terms of additional funding and
settlement of debt has been and remains a significant source of
strength and stability for ADM. ADM will enter 2024 in a much
stronger position than it did in 2023 to advance the business
interests of the Company."
Enquiries:
ADM Energy plc +44 20 7459 4718
Stefan Olivier, CEO
www.admenergyplc.com
Cairn Financial Advisers LLP +44 20 7213 0880
(Nominated Adviser)
Jo Turner, James Caithie
Hybridan LLP +44 20 3764 2341
(Broker)
Claire Louise Noyce
ODDO BHF Corporates & Markets AG +49 69 920540
(Designated Sponsor)
Michael B. Thiriot
Gracechurch Group +44 20 4582 3500
(Financial PR)
Harry Chathli, Alexis Gore, Henry Gamble
About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural
resources investing company with an existing asset base in Nigeria
and the United States. ADM Energy holds a 9.2% profit interest in
the oil producing Aje Field, part of OML 113, which covers an area
of 835km(2) offshore Nigeria. Aje has multiple oil, gas, and gas
condensate reservoirs in the Turonian, Cenomanian and Albian
sandstones with five wells drilled to date. ADM also has interest
in an oil and gas lease in the U.S. state of California.
ADM Energy is committed to maximizing long-term value from its
existing asset base in Nigeria while targeting other investment
opportunities in the oil and gas sector with attractive risk reward
profiles such as proven nature of reserves, level of historic
investment, established infrastructure and route to early cash
flow.
About OFX Holdings, LLC
Formerly, Tennessee Black Gold LLC, OFX Holdings is a private
U.S. investment company led by Claudio Coltellini, an Italian
national who for the last 15 years has invested in U.S. oil and gas
and leads four private companies with assets in the states of
Texas, Louisiana, Kansas and California.
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