HYR.L Regulatory News (HYR)

4 Jul 2005 07:31

HydroDec Group plc04 July 2005 4 July 2005 HYDRODEC SIGNS CONDITIONAL AGREEMENT TO ACQUIRE ITS JOINT VENTURE PARTNER OTS Hydrodec Group plc ('Hydrodec') (AIM: HYR), is pleased to announce it has signeda conditional agreement (the "Acquisition Agreement") to acquire its jointventure partner Oil Treatment Services Pty Ltd ("OTS"), a leading provider oftransformer maintenance services to the electricity industry in Australia. Hydrodec will, through its purchase of OTS, acquire: • the Environment Protection Authority ("EPA") licensed freehold site at Young, NSW, Australia; and • 100% of the issued share capital of OTS, whose operations include: - its 50% share of the existing joint venture agreement with Hydrodec to re-refine PCB contaminated and used transformer oils (the "Joint Venture"); - its oil testing laboratories and its transformer oil regeneration business, trading as "OTS Transcare". Completion of the transaction is subject to the satisfaction of certainconditions precedent, including the receipt of regulatory approvals and theapproval of OTS's banks. Hydrodec expects that completion will occur by the endof August 2005. The consideration payable by Hydrodec on completion of the transaction isestimated to comprise the issue of 6,346,000 new ordinary shares of 0.5p each inHydrodec at a fixed price of 22.2p, a net cash consideration of £256,000 andHydrodec assuming £595,000 of OTS's debt. Based on the unaudited management accounts of OTS Transcare and pro-formaearnings for OTS's recently acquired laboratory in Adelaide, South Australia, itis estimated that for the 11 months ended 31 May 2005 these entities will inaggregate generate revenues of approximately £926,000 and earnings beforeinterest, depreciation and tax of approximately £216,000. The acquisition gives Hydrodec the chance to establish a world class referencesite to showcase its advanced technology. Ownership of the EPA licensed sitewill allow Hydrodec to expand the existing transformer oil business with the newplant currently under construction that will be able to treat up to 20,000litres per day. Significantly, it also provides Hydrodec with the foundation toimplement its proprietary technology to re-refine hydraulic oil for sustainableuse and de-contaminate other chlorinated organic wastes commonly referred to as'POP's. Under the terms of the Joint Venture, OTS has been managing operations of thefirst Hydrodec plant which can process up to 3,000 litres per day of transformeroil. There will be minimal revenue in the first half of 2005 for this plant andfor Hydrodec. To strengthen the operations team, Brian Davies will be appointedas General Manager at the Young site. Mr Davies has over 30 years experiencewith ICI in Europe, Africa, and Australia. He has held senior roles in plantcommissioning, instrumentation, process engineering, operations and production. Hydrodec CEO, Chris Nash states: "This acquisition is an opportunity to takefull control of operations using the Hydrodec technology and to secure a directrelationship with customers in the electricity industry in Australia through theprovision of related value added services." John Gunn, Chairman of Hydrodec, concludes: "Hydrodec has a versatile and uniquetechnology for oil re-refining and hazardous waste treatment that supportsKyoto's sustainable greenhouse objectives and meets stringent StockholmConvention protocols. It is also a commercially competitive option for tacklingsome of the big challenges faced by the power, mining and chemical industries indealing with contamination, and will assist in the more sustainable use of theworld's resources. " -ENDS- For further information please contact: Chris Nash Chief Executive Officer Hydrodec Group plc Tel: 020 7861 9633 Nick Fox M: Communications Limited Tel: 020 7153 1530 Further information on Hydrodec Hydrodec was established to commercialise the Hydrodec technology which is anoil re-refining process designed to regenerate oil and remove harmfulcontaminants such as PCBs (polychlorinated biphenyls). The technology can alsobe used to treat a variety of other chlorinated organic wastes, commonlyreferred to as "Persistent Organics Pollutant" ("POPs"). The Hydrodec technology is based on intellectual property comprising a protectedpatent in Australia and certain other jurisdictions developed by theCommonwealth Scientific and Industrial Research Organisation ("CSIRO") ofAustralia. Hydrodec has entered into an exclusive global license with CSIRO forthe marketing and distribution of the Hydrodec Technology. The terms of thislicence were summarised in paragraph 11.2(a) of Part VII of the AIM admissiondocument published by Hydrodec on 25 November 2004. The chemical industry is faced with treating POPs both in stockpile and asby-products of current manufacturing processes. Hydrodec offers a "carbonefficient" economic "no-emission" solution to these challenges and in manycircumstances allows "re-manufacturing" of POP chemicals into a valuableproduct. Hydrodec provides permanent environmental damage and environmentalliability relief to owners and producers of many POP chemicals. Since June 2004 a Hydrodec plant capable of processing up to 3,000 litres perday has been operating in Young which re-refines PCB-contaminated transformeroils for Australian power utilities. In February 2005, Hydrodec announced the construction of a new Hydrodec plant,capable of processing up to 20,000 litres per day of speciality oils and/orchlorinated organic wastes. Further information on OTS and the joint venture OTS Transcare, formerly owned and operated by Castrol, is a leading provider oftransformer maintenance services to the electricity industry in Australia.Under the Acquisition Agreement, Hydrodec will acquire all of OTS Transcare'soperations (including intellectual property and web-based client servicesystems), which provide services for: - Transformer oil insulation monitoring to enhance performance and to prevent sudden transformer failure; - Comprehensive analysis of transformer oil samples in OTS's two National Australia Testing Association (NATA) approved laboratories; - Asset risk assessment ratings for transformers; - Mobile transformer oil regeneration; - Provision of advice and action plans for prioritising transformer oil replacement required as a result of oxidation and/or PCB contamination. Further information on the transaction Following the preparation of completion accounts by independent accountants, theconsideration will be adjusted for working capital and annualised earnings forthe period ended on the date of completion (the "Completion Date"). As part of the Acquisition Agreement, the vendors have agreed not to dispose ofany of their Hydrodec consideration shares they receive for a period of 6 monthsafter the Completion Date and to restrict disposals for a further period of 12months after the expiry of the initial 6 months. This information is provided by RNS The company news service from the London Stock Exchange