7th Mar 2016 10:15
LONDON (Alliance News) - Hydrodec Group PLC on Monday said it has disposed of its UK operations to Andrew Black, a non-executive Director and shareholder, for a nominal GBP1.
However, Black also is taking on GBP1.2 million in the third-party debt owed by the operations, while Hydrodec will retain a 10% royalty entitlement.
Shares in Hydrodec were trading down 14% at 3.85 pence on Monday morning following the announcement.
The oil and natural gas company said it undertook a strategic review of its UK operations, which comprise Hydrodec (UK) Ltd and Hydrodec Re-Refining (UK) Ltd, following a "significant deterioration" in the outlook of the businesses due to falling oil prices, making them unprofitable.
Given Hydrodec's limited cash resources and significant cash burn rate, it said it has now concluded that it is in its best interests to dispose of the UK operations to a buyer able to properly finance and develop the business in the near term.
As part of the agreement, Black has granted Hydrodec a contractual right to receive 10% of his entitlement to any future net profits from the UK lubricant oil re-refining project on distribution or exit.
The estimated net assets of the UK operations were around GBP4.7 million as at December 31 and generated an estimated earnings before interest, tax, depreciation and amortisation loss of around GBP3 million in 2015.
Hydrodec also said it has appointed Acting Chief Executive Chris Ellis as permanent CEO with immediate effect.
"Whilst there is more to do to reduce cost and strengthen margins, our focus continues to be on delivering operational performance and efficiencies, and driving the company to a profitable 2016," Chairman Colin Moynihan said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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