Hydrodec Group plc announced the appointment of Chris Ellis, previously acting chief executive, as chief executive effective immediately. Hydrodec also announced that it has agreed to dispose of Hydrodec (UK) Limited and Hydrodec Re-Refining (UK) Limited for a consideration of GBP 1, including GBP 1.2 million (USD 1.71 million) of existing third-party debt.
In addition, the buyer will grant Hydrodec a contractual right to receive 10% of the buyer’s entitlement to any future net profits of the UK lubricant oil re-refining project on distribution or exit. The buyer will bear all risk and responsibility for developing the UK lubricant oil re-refining project going forward, with Hydrodec retaining only a passive economic interest under these profit-sharing arrangement.
Further to the appointment of Ellis as acting chief executive in December 2015, Hydrodec has undertaken a detailed strategic review of its UK waste oil collections business and proposed UK lubricant oil re-refining project, following a significant deterioration in the outlook of its UK Operations, driven primarily by the rapid decline in global crude oil prices and continued challenging market conditions.
Despite implementing extensive restructuring and cost-saving measures during 2015, including an approximate 36% reduction in headcount, its UK operations remained unprofitable. Given the significant cash burn rate and limited cash resources available, the company directors have reviewed all available options and have concluded that it was in its best interests to dispose of its UK operations.
One of the potential purchasers identified was Andrew Black, a non-executive director and a substantial shareholder. Multiple indicative offers were received and evaluated. Following a detailed review of the offers, and an initial engagement and period of exclusivity with another bidder, which did not indicate sufficient signs of progress, the company directors pursued the offer proposed by Black.
The transfer of the UK licence and basic engineering package from CEP is subject to the consent of CEP. The estimated net assets of the UK Operations were GBP 4.7 million (USD 6.68 million).