HYR.L Regulatory News (HYR)

11 Jun 2007 07:01

HydroDec Group plc11 June 2007 11th June 2007 HYDRODEC GROUP PLC ISSUE OF NEW EQUITY TO FUND USA EXPANSION Highlights • Placing of £2,300,000 gross with institutional investors• Proceeds of placing will fund commencement of construction of first US plant in Ohio Hydrodec Group plc ("Hydrodec" or "the Company") today announces the placing of9,200,000 new ordinary shares of 0.5p each at a price of 25p per share ("NewOrdinary Shares"), to raise £2,300,000 gross (the "Placing"). Further details ofthe Placing are set out under "Principal terms of the Placing" below. NumisSecurities has acted as nominated adviser and broker and has placed the NewOrdinary Shares, the subject of the Placing. The funds from the Placing will be used to commence construction of Hydrodec'sfirst US plant in Canton, Ohio. Canton was chosen due to its location in one ofthe major industrial regions in the USA, close to both the suppliers offeedstock oil and potential Superfine transformer oil customers. As previouslyannounced, the State of Ohio and the City of Canton have also provided a packageof incentives to Hydrodec. The Company has received the majority of thenecessary development and construction approvals for the site. Construction ofthe plant, commencing with site earthworks and major critical path items such asthe tank farm, is expected to start later this month. Orders will be placed forequipment that has a long lead-time for delivery. All major civil constructionand building contracts will be put out to tender and are expected to be awardedshortly thereafter. It is currently anticipated that production will commence inlate 2008 and that total capital expenditure on the 80,000 litre per day plantwill be c.$15 million. Commencement of construction this month should enable major weather dependentworks to be completed prior to the onset of Ohio's harsh winter. Completion ofthese works enables key process plant assembly activities to progress onschedule under cover during the winter months, thus avoiding several months ofdelays to the construction program. The funding will also facilitate the creation of a formal US infrastructure forthe Company, starting with the recruitment of Ohio staff, much of the cost ofwhich has been subsidised by the State. Hydrodec will be able to commence thenext stage of marketing and business development within the transformer oilindustry and further develop relations with existing operators. This will allowthe Company to seek expressions of interest and to negotiate possible take offagreements, both supply-side for used feedstock oil and demand-side forSuperfine oil. As well as the developments within Ohio, the Placing will allow the Company tofinalise plans for the location and structure of the Mississippi plant. Ashort-list of potential sites has been identified, but there are a number oflogistical and grant issues to be confirmed with the State of Mississippi.Significant legal, logistical, development work and lobbying has already takenplace, and an announcement on a location for the plant will be made as soon asthis is finally determined. The Directors believe the Placing will assist Hydrodec in negotiating favourableterms on a debt package necessary to finance the balance of the capital cost ofthe construction of the plants. A number of possible packages are currentlybeing considered. The Placing will not provide sufficient funds to enable the completion of theconstruction of the Ohio plant or to enable the construction of the Mississippiplant. The Company will need to put in place a debt or similar facility asdescribed for the project financing of the plants. The Company is also proposing to convene an extraordinary general meeting ofshareholders ("EGM") to grant the directors further authorities to enable theCompany to issue a further 10% of the enlarged issued share capital of theCompany for cash on a non-pre-emptive basis without recourse to shareholders.The Directors believe that this may facilitate the debt raising. Furtherdetails are set out under "Proposed Extraordinary General Meeting" below. John Gunn, Chairman, commented, "I am delighted that construction on Ohio cannow commence. This is key step in the corporate growth of Hydrodec and thedevelopment of the Mississippi plant further shows the serious intentionsHydrodec have within the US transformer oil market. I hope that negotiations onthe funding package for the balance of capital costs for the two plants will beconcluded soon, and I look forward to announcing this in due course". Principal terms of the Placing The Placing, principally with institutional Shareholders, is of 9,200,000 NewOrdinary Shares. The New Ordinary Shares are being placed at 25p per share, adiscount of approximately 4.8% per cent. to the closing mid-market price of26.25p per Ordinary Share on 8 June 2007. The Company has entered into an agreement relating to the Placing with NumisSecurities Limited ("Numis") under which Numis has agreed to use it reasonableendeavours to procure subscribers for the Firm Placing Shares and theConditional Placing Shares. The terms of settlement in relation to the Placingare set out in placing letters issued by Numis. The Placing is being made pursuant to the authorities granted at the Company'sAnnual General Meeting on 26 April 2007. At this meeting, Shareholders passedresolutions granting the directors general authority to allot 61,548,400Ordinary Shares, and dis-applying the statutory pre-emption rights on new issuesin respect of 9,232,200 Ordinary Shares. Immediately following the completion of the Placing, the total number of sharesin issue will be 193,845,402. The New Ordinary Shares will rank pari passu inall respects with the existing Hydrodec shares in issue. The Company will apply for Admission of the New Ordinary Shares to trading onAIM. It is expected that admission of the New Ordinary Shares will becomeeffective and dealings in such shares will commence on 14 June 2007. Proposed Extraordinary General Meeting The Placing will utilise the majority of the Company's current dis-applicationauthority. Accordingly, the Company is proposing to convene the EGM on oraround 10 July 2007. At such meeting, the Company will propose a specialresolution to grant further general authority to the Directors to allot relevantsecurities up to an agreed limit and to allot equity securities for cash withoutthe application of statutory pre-emption rights up to 10 per cent. of the issuedshare capital of the Company following the implementation of the Placing. A circular convening the EGM is expected to be despatched to shareholders nextweek. For further information please contact: John Gunn, ChairmanHydrodec Group plcTel: 0207 236 6236 Emma DavisCurve PRTel: 07764 197 003 Nick WestlakeNumis SecuritiesTel: 0207 260 1000 This information is provided by RNS The company news service from the London Stock Exchange