Subsidiary Financing Transaction, Update on Publication of Annual Results and Half-yearly Report

ADM Energy’s subsidiary VEUSA has agreed a five-year senior secured loan of US$1.0m with Shoreline at 12% p.a., plus 1,373,806 five-year warrants (exercise $0.72791) representing 51% of VEUSA; those VEUSA shares may be exchanged into ADM shares at a ratio of 2,000 ADM ordinary shares per VEUSA share (subject to Takeover Code restrictions and a maximum 29.99% voting interest absent a Rule 9 waiver). ADM itself received an additional unsecured US$250k loan at 30% p.a., bringing aggregate new funding to US$1.25m, and agreed to pay a £100k structuring fee by issuing 100,000,000 ordinary shares (0.1p each) expected to be admitted circa 12 Feb 2026 (post-admission issued share capital 1,789,177,144). Vega (100% ADM subsidiary) has commenced US litigation over Texas oil & gas well ownership; the company expects to publish its 2024 annual and 2025 half-year reports and to seek reinstatement of AIM trading in early February, while the financing and potential equity dilution materially affect governance, control risk and near-term liquidity.

Analysis

Market structure: Shoreline (the lender) is the clear immediate winner — it secures $1.0m, 1.37m VEUSA warrants (potentially 51% of VEUSA) plus board/observer rights and a 5.9% immediate equity issue to ADM via a £100k structuring fee. Public ADME shareholders are losers: 100m shares issued (5.9% dilution) plus a looming conversion overhang capped at 29.99% voting power creates a multi-quarter supply overhang that will suppress price discovery on relisting. Cross-asset: expect equity implied volatility to spike on relisting and around Panel/Rule 9 developments; USD funding vs GBP listing creates FX exposure if VEUSA revenues are in USD; credit spreads on similar micro-cap energy issuers should widen modestly.

Key Decisions for Investors

• Establish a tactical 2–3% NAV short position in ADM Energy plc (AIM: ADME) within 1–3 trading days of relisting (expected week of 2 Feb), using CFDs or borrow where available. Target 30–50% downside within 3 months on dilution + control overhang; set a hard stop-loss at +25% above entry to limit squeeze risk.
• Initiate a matched 1.5% NAV pair trade: short ADME / long BP.L or SHEL.L (1.5% NAV) to isolate company-specific governance and liquidity risk from oil price moves; hold 3–6 months and tighten if the Panel signals a Rule 9 waiver process.
• Buy asymmetric downside protection: allocate 0.5–1% NAV to 3-month ADME puts (or, if illiquid, a short-dated OTC digital put) struck ~25–35% OTM to capture elevated post-relisting volatility and the admission (~12 Feb) event window; roll or liquidate after volatility collapse.
• Prepare an event-driven long (1% NAV) conditional deployment: only deploy after two consecutive months of verified VEUSA positive free cash flow AND written lender consent to remit dividends/loans to PLC, or upon a favourable interim ruling in the Vega litigation. Take profits on a +100% move or reassess after 12 months.