Hydrodec raises £3m

Waste oil recycler Hydrodec is raising £3m from a placing at 6p a share so that it can become more efficient and expand capacity. At the end of August, Hydrodec reported an 82% increase in revenues to $8.2m in the six months to June 2010 and the current demand exceeds the existing capacity. Third quarter sales are expected to exceed Working capital shortages have made it difficult to meet demand.There was a £2.12m cash outflow in the first half of 2010 and Hydrodec is hopeful that it can start generating cash in the first half of 2011. Net debt was £7.64m at the end of June 2010.The cash will enable Hydrodec to invest in its US plant to reduce costs and increase production levels. It will also help to increase feedstock supplies and ensure that the year end interest payment on the loan notes can be paid. Hydrodec will also need cash for a bond required for final approval from the US Environmental Protection Agency to treat PCB-contaminated feedstock.Hydrodec has also agreed a 50/50 Japanese joint venture with Kobelco, a subsidiary of Kobe Steel. Hydrodec provides the technology while Kobelco will provide local knowledge and contracts. The processing plants need to be near to the source of waste oil so that it does not have to be transported long distances. Two potential sites have already been identified.