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(Alliance News) - ADM Energy PLC on Tuesday said it has agreed amended terms to a secured convertible loan note, and reduced its debt by over GBP1.0 million through various transactions.
Shares in ADM Energy were down 9.8% at 0.45 pence in London on Tuesday afternoon.
The London-based natural resource investor said the combined deals resulted in "significantly reduced liabilities", decreasing its net debt by approximately GBP1.1 million.
ADM said it agreed with OFX Holdings LLC amended terms for its acquisition of Blade Oil V in late May, allowing it to concentrate on developing cash generating assets. Under the new agreement, ADM's interests in the Texas and Kansas leases are reassigned to OFXH, which will cancel USD250,000 in debt obligations owed by ADM.
ADM said that due to the amendments, the total maximum consideration for the Blade V acquisition was reduced to USD1.2 million from the prior consideration of USD1.6 million.
ADM and OFXH have also agreed to consolidate the former's remaining loans due to OFXH, the advances for which total USD337,500.
Finally, ADM said it has agreed amended terms to the secured convertible loan note, for which in late May it had received subscriptions totalling USD900,000. Of this, ADM has received USD425,000 in gross proceeds to date.
ADM said that under the new terms, it is no longer required to use 100% of the proceeds to fund the development of Altoona lease. Instead, it must use at least 50% of the gross proceeds to fund projects held by or investments in the business interests of US arm ADM Energy (USA) Inc. It can use up to 30% to fund general working capital requirements, and up to 20% for debt repurchased at at least a 50% discount. The 1.25% override royalty interest to be granted in Altoona, meanwhile, has been replaced with a 10% interest in ADM Energy USA's pretax profit.
ADM believes the above transactions will allow it to attract additional capital, providing more flexibility and helping it further its projects and investment objectives.
Chief Executive Officer Stefan Olivier said the transactions will result in "a direct increase in net asset value for benefit of shareholders", and that OFXH's support "remains a significant source of strength and stability".
"ADM will enter 2024 in a much stronger position than it did in 2023 to advance the business interests of the company," he added.
By Emma Curzon, Alliance News reporter
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