HydroDec Group plc Canton update and working capital facilities (4709H)

TIDMHYR

RNS Number : 4709H

HydroDec Group plc

01 December 2015

1 December 2015

Hydrodec Group plc

("Hydrodec" or the "Company")

Production update at Canton and working capital facilities

Hydrodec Group plc (AIM: HYR) is pleased to announce that trains 5 and 6 at its plant at Canton, Ohio have been successfully started and brought into production. This is an important milestone and means that all six trains at the Canton plant have now been brought into service. The Company maintains its production projections for Canton for the current year at 10 million litres of processed oil and continues to anticipate the Canton plant to be cash generative from an operating perspective by the end of 2015.

Further to this milestone and in line with our intention to support the Company's short term working capital position and ensure that the Company remains adequately funded during the important ramp up of production at Canton, the Company announces today that:

1. It has entered into an agreement to extend its GBP1.35 million secured working capital facility with Andrew Black, a Non-Executive Director, which was announced on 21 October 2015 (the "Original Facility"). Andrew Black has agreed to extend the Original Facility by GBP800,000 to GBP2,150,000 and otherwise on the same terms as the Original Facility other than the final maturity date for the Original Facility has been extended to 31 December 2017 (the "Increased Existing Facility"). The Increased Existing Facility is secured over the Company's licence of and rights to develop the CEP lubricant oil re-refining technology in the UK. As at 30 June 2015, the carrying value of that licence in the Company's accounts was US$2 million; and

2. It has entered into an additional working capital facility (the "Additional Facility") with Andrew Black. The Additional Facility is for up to GBP2.0 million with interest payable at 8 per cent per annum on drawn-down funds, has an arrangement fee of 2.5%, is otherwise on normal commercial terms and with a final maturity date of 31 December 2017. The Additional Facility is secured over the rights for Hydrodec Development Corporation Pty Ltd to receive income based on the quantity of SUPERfine(TM) oil produced by Hydrodec of North America LLC and Hydrodec of Australia Pty Ltd respectively, which royalty, based on average annual production, is estimated to generate approximately US$1 million per annum. As at 30 June 2015, the carrying value of that licence in the Company's accounts was US$3.5 million.

Related Party Transaction and substantial Transaction

Andrew Black is a Non-Executive Director and a substantial shareholder (as defined in the AIM Rules for Companies (AIM Rules)) of the Company. Accordingly, when aggregated with the Original Facility provided by Mr Black in October 2015:

-- the agreement by Mr Black to increase the Original Facility to GBP2.15 million constitutes a related party transaction under the AIM Rules; and

-- the provision by Mr Black of the Additional Facility constitutes both a related party transaction and a substantial transaction for the purposes of the AIM Rules.

The Directors, with the exception of Mr Black, consider, having consulted with the Company's Nominated Adviser, Peel Hunt LLP, that the terms of the Increased Existing Facility and the Additional Facility are fair and reasonable insofar as shareholders are concerned.

For further information please contact:

 
                                    020 3300 
 Hydrodec Group plc                  1643 
 Ian Smale, Chief Executive 
  Chris Ellis, Chief Financial 
  Officer 
  James Hodges, General 
  Counsel and Company Secretary 
 Peel Hunt LLP (Nominated           020 7418 
  Adviser and Broker)                8900 
 Justin Jones 
  Mike Bell 
 Vigo Communications (PR            020 7016 
  adviser to Hydrodec)               9570 
 Patrick d'Ancona 
  Chris McMahon

Notes to Editors:

Hydrodec's technology is a proven, highly efficient, oil re-refining and chemical process initially targeted at the multi-billion US$ market for transformer oil used by the world's electricity industry. Spent oil is currently processed at two commercial plants 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, a toxic additive banned under international regulations. Hydrodec's plants are located at Canton, Ohio, US and Young, New South Wales, Australia. In 2013, Hydrodec acquired the business and assets of OSS Group, the UK's largest collector, consolidator and processor of used lubricant oil and seller of processed fuel oil, with a national network of oil storage and transfer stations. Used oil is converted into processed fuel oil at OSS's plant at Stourport and principally sold on to the UK quarry and power industry. In April 2015, Hydrodec further acquired the business and assets of Eco Oil, a leading UK waste oil collector and supplier of recycled industrial fuel oil into the power and road stone industries. It is also one of four significant providers of waste management services to the marine industry in the UK, specifically oily-water slops or marine pollutant (MARPOL). In line with our stated intention to develop a base oil re-refinery in the UK, we have an exclusive licence agreement with California-based Chemical Engineering Partners (CEP) to develop the CEP wiped-film evaporation and hydrogenation technology in the UK as well as the basic engineering for a 75 million litre per annum capacity base oil re-refinery.

Hydrodec's shares are listed on the AIM Market of the London Stock Exchange. For further information, please visit www.hydrodec.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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