REG - ADM Energy PLC - Financing Update and Debt and Asset Restructuring

Adm EnergyAnnouncement

14/11/2023 07:15

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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 £1.1 million in combination of discounted debt
settlements and equity transactions.

o  Total reduction to original value of debt of £432,100 resulting in
increase in net asset value for benefit of shareholders.

o  £204,918 in debt reduction related to amendments to Blade Oil V, LLC
transaction originally announced 25 May 2023.

o  Remainder of debt settled as to £125,760 in cash and £346,650 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 £205,000) 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 £709,280 original value of
certain outstanding trade and other creditors for £369,570 of which £101,170
has been paid in cash with £147,750 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 £339,710 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 £102,000 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 £0.01
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 £1 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 (http://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 835km² 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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