£2 million debt financing to fund growth

25 May 2011

Hydrodec Group plc

(the "Company" or the "Group") 

£2 million debt financing to fund growth

The Board of Hydrodec Group plc, the cleantech industrial oil re-refining group (AIM:HYR), is pleased to announce that the Company has received commitments for £2 million in debt funding to build its inventory of feedstock, amid growing US demand for the Company's premium quality SUPERfine oil, and to strengthen its balance sheet.

The Company announced at the time of its 2010 results on 7 April 2011 that it was in discussions with potential sources of debt funding. The funding will primarily allow it to build its US feedstock inventory while availability typically improves before the winter. 

The Company has received commitments to subscribe for £2.0 million of secured fixed rate notes ("Notes"). The Notes, which are not convertible into ordinary shares, have a three year term (repayable by 31 July 2014) and a 10 per cent. per annum coupon. Security has been granted to the lenders over the Group's Canton site. The lenders have also been granted a total of 10 million warrants to subscribe for ordinary shares in the Company at 8 pence per share, exercisable at any time after two years and within five years from the date of grant ("Warrants"). The Warrants have been allocated pro rata to the lenders' interest in the Notes. 

The funding is anchored by a £1.4 million commitment from Andrew Black, co-founder of Betfair Group plc, who has built-up a five per cent. equity stake in the Company. The remainder of the new money comes from individuals.

Neil Gaskell, Chairman of Hydrodec, commented: "This is the first borrowing the Company has secured against its balance sheet, reflecting the growing maturity of the business. The proceeds will allow the Company to fund increased supplies of feedstock as customer demand for Hydrodec's SUPERfine oil continues to grow, and to continue the development of new business especially in Japan. We welcome Mr Black as well as the other investors' strong support for the Company. Their involvement and keen interest in the development of the Group is a great validation of Hydrodec's potential and the environmental benefits of its technology."

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Notes to Editors:

The Group's technology is a proven highly efficient oil re-refining and chemical process which is being initially targeted at the multi-billion US$ market for transformer oil used by the world's electricity industry. The Group takes spent oil, including polychlorinated biphenyl ("PCB") contaminated oil, as the primary feedstock, which is then processed at its two plants enabling 99 per cent or greater recovery of oil for reuse while also eliminating PCBs, a toxic additive banned under international regulations, without environmentally harmful emissions.