Hydrodec acquires OSS

Hydrodec Group plc, the U.K.-based cleantech industrial oil re-refining group, announced that it has acquired the principal business and assets of OSS from the administrators of OSS Group Limited for GBP4.65 million (USD7.2 million) in cash.
The combination of OSS’ access to used oil, together with its operating capability, makes it an ideal partner for Hydrodec to utilize Hydrodec’s existing transformer oil technology and to develop and deploy its new lubricants re-refining technology in the U.K.
OSS business is the U.K.’s largest collector, consolidator and processor of used lubricating oil and seller of processed fuel oil, processing approximately 60 million liters of used oil in 2012.
It has a national network of oil storage and transfer stations, currently serviced by a fleet of more than 90 trucks, which collect used oil and other garage workshop waste from more than 30,000 customers.
Used oil is converted into processed fuel oil at OSS’ plant at Stourport and principally sold on to the U.K. quarry and power industry. OSS’ existing senior management team led by Iain Lees will be joining Hydrodec, together with approximately 200 existing employees.
The current OSS business generated revenues of GBP28.5 million in 2012 (USD44.6 million) and a normalized EBITDA of approximately GBP1 million (USD1.5 million).
The net asset value of the acquired assets was assessed at approximately GBP4.5 million (USD7 million).
The purchase price is being financed by way of a short-term revolving credit facility provided by one of its non-executive directors, Andrew Black.
Hydrodec Chairman Ian Smale said he expects the transaction to be EBITDA accretive to the Hydrodec Group within two months of the acquisition (after transaction costs have been incurred) and accretive to earnings overall in 2014.
“OSS offers a very exciting new market entry that delivers the key elements of our business development strategy–a strong position in the used oil value chain, a profitable platform for growth with genuine business optionality, and the capability to accelerate deployment of our existing transformer oil technology as well as assist in our technology development,” said Smale.
In April, the company announced a strategic partnership with G&S Technologies Group (“G&S”), a leading New Jersey-based electricity transformer recovery services group, which has a 50-year track record of serving the industrial and utility industries throughout the U.S.
The deal involved the creation of a new entity, Hydrodec of North America LLC, in which Hydrodec will ultimately own 50.1% and contribute its existing re-refining plant in Canton, Ohio. The company will be one of the largest handlers and processors of waste and polychlorinated biphenyl (PCB) contaminated transformer oil in North America.