TIDMHYR
RNS Number : 8365I
HydroDec Group plc
13 August 2019
13 August 2019
Hydrodec Group plc
("Hydrodec" or the "Company")
Disposal of Hydrodec's Australian Plant
Related Party Transaction
Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil
re-refining group, is pleased to announce the disposal of its
Australian plant and equipment, and an agreement to licence certain
other rights in respect of those assets, to Greenbottle Re-refining
(UK) Limited ("Greenbottle").
-- The plant and equipment has been sold to Greenbottle for a
gross consideration of A$2m in cash;
-- The Company is expected to receive a net figure of A$1.7
million after estimated decommissioning and transportation
costs;
-- In addition, the Group has the right to receive a royalty
from Greenbottle, for an initial period of 8 years, further details
are below; and
-- The anticipated net proceeds will be used to satisfy
outstanding liabilities of the Australian operating entities.
Background to the disposal
As a result of its strategic review last year, the Board decided
that with the sub-scale capacity of the Australian plant, the
impact of the business on management bandwidth, and the limited and
fragmented domestic market providing significant feedstock
challenges, shareholder equity was better invested behind the US
growth plans and it therefore initiated a formal process to sell
the Group's Australian assets and business.
Disposal process
The strategic review was initiated in the first half of 2018,
following which a sale process in respect of the Australian
business was conducted by an independent third-party financial
adviser, through which potential purchasers were identified,
approached and invited to submit indicative offers for the plant
and operations owned by Hydrodec Australia. Multiple indicative
offers were received by the Company and evaluated up until the end
of June 2019.
One of the potential purchasers identified was Greenbottle, a
company controlled by Andrew Black, a non-executive Director and a
substantial shareholder of the Company. A subcommittee of the Board
(excluding Andrew Black and David Dinwoodie, both of whom are
directors of the Company and of Greenbottle) chaired by Chris
Ellis, the Chair of the Audit Committee, took legal and corporate
governance advice as a result of the related party involvement in
the disposal process; carried out a detailed review of the offers;
and continued discussions and engagement with several of the
interested parties.
At the conclusion of that process the subcommittee recommended
pursuing the offer proposed by Greenbottle; being the highest in
absolute value terms and the most efficient in respect of
Hydrodec's requirements to satisfy the terms of the sale. In
reaching this decision, the independent Directors of the Company
considered, inter alia, the progress of the initial discussions,
the respective values proposed by the different buyers, the
bidders' ability to execute the transaction on an expedited basis,
and the potential to offer the Company future value in relation to
the further development of its technology.
Terms of the disposal
The plant owned by the Group's Australian operations has been
sold to Greenbottle for a consideration of A$2m in cash, less
estimated decommissioning and transportation costs (to the
Australian port) of A$0.3 million. Ongoing costs of transportation
from Australia to the UK are for the account of Greenbottle. In
addition, the Group has the right to receive a royalty from
Greenbottle, for an initial period of 8 years, following the
granting of an exclusive licence to operate Hydrodec's technology
in the UK, calculated at 5% of revenues derived. The royalty fee is
subject to a minimum charge in year 4 of A$30,000 rising to
A$150,000 in year 8. Any further development or improvements to the
technology will accrue to Hydrodec under the terms of the licence.
The anticipated net proceeds of A$1.7 million will be used to
satisfy outstanding liabilities of the Australian operating
entities.
Related party transaction
Andrew Black, the 98% ultimate shareholder, and a director, of
Greenbottle, is a non-executive Director and a substantial
shareholder (as defined in the AIM Rules for Companies) of the
Company. David Dinwoodie, a 2% ultimate shareholder, and a
director, of Greenbottle, is the Chief Executive Officer of the
Company. Accordingly, the disposal of the Australian plant
constitutes a related party transaction for the purposes of the AIM
Rules.
The Directors of the Company, except for Andrew Black and David
Dinwoodie, consider, having consulted with the Company's Nominated
Adviser, Arden Partners, that the terms of the disposal of the
Australian plant are fair and reasonable insofar as shareholders
are concerned.
For further information please contact:
Hydrodec Group plc hydrodec@vigocomms.com
Lord Moynihan, Executive Chairman
Arden Partners plc (Nominated Adviser and Broker) 0207 614 5900
Corporate Finance: Ciaran Walsh, Maria Gomez De Olea
Sales: Aimee Kerslake
Vigo Communications (PR adviser to Hydrodec) 020 7390 0230
Patrick d'Ancona
Chris McMahon
Notes to Editors:
Hydrodec Group plc is a clean-tech industrial oil re-refining
group with operations in the USA.
Hydrodec's technology is a proven, highly efficient, oil
re-refining and chemical process principally targeted at the
multi-billion US dollar market for transformer oil used by the
world's electricity industry. MarketsandMarkets forecasts that the
global transformer oil market is expected to grow from USD 1.98
billion in 2015 to USD 2.79 billion by 2020 at a CAGR of 7.14%.
Used transformer oil is processed with distinct competitive
advantage delivered through very high recoveries (near 100%),
producing 'as new' high quality oils at competitive cost and
without environmentally harmful emissions. The process also
completely eliminates PCBs (polychlorinated biphenyls), a toxic
additive banned under international regulations.
In 2016 Hydrodec received carbon credit approval from the
American Carbon Registry ("ACR"), enabling its product to be sold
with a carbon offset and creating an incremental revenue stream.
The Group is now generating carbon offsets through the re-refining
of used transformer oil, which would otherwise ordinarily be
incinerated or disposed of in an unsustainable manner. This is a
highly distinctive feature for the Group, confirming (as far as the
Board is aware) Hydrodec as the only oil re-refining business in
the world to receive carbon credits for its output. This is a
significant endorsement of the Company's proprietary technology and
standing as a leader in its field.
Hydrodec's shares are listed on the AIM Market of the London
Stock Exchange. For further information, please visit
www.hydrodec.com.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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END
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