United Kingdom-based Hydrodec Group this week unveiled details of the sale of its Australian hydrotreater – to its biggest shareholder, who will have the plant dismantled and shipped to the U.K.
A year ago, when the company first announced it was exiting Australia, the plan was to either sell the unit or transfer it to Hydrodec’s site in the United States. The company operates a rerefinery in Canton, Ohio, using the same Australian-developed technology to recycle used electrical transformer oil.
Hydrodec said in a statement earlier this week that the plant was sold to Greenbottle Rerefining, a U.K.-registered company 98 percent owned by Andrew Black, a non-executive director and substantial shareholder of Hydrodec, and 2 percent owned by David Dinwoodie, CEO of Hydrodec. Terms of sale are for AU $2 million (U.S. $1.4 million) cash, less estimated costs of AU $300,000 for decommissioning and transportation to an Australian port. Terms also include Hydrodec receiving royalties from Greenbottle for eight years for exclusive rights to use the patented technology in the U.K.
Hydrodec said it had received multiple offers for the Australian assets. The company said the Greenbottle offer was the highest in absolute value terms and the most efficient in respect of Hydrodec’s requirements to satisfy the terms of the sale. Hydrodec said Black and Dinwoodie were not on the committee considering the bids.
Hydrodec said the anticipated net proceeds of AU $1.7 million will be used to satisfy outstanding liabilities of the Australian operating entities.
“I think its disappointing that an Australian-developed technology will be potentially lost to us,” said a local industry executive, speaking on condition he not be named.
The Australian government’s scientific research body, the Commonwealth Scientific and Industrial Research Organization, developed and registered the electrical transformer oil rerefining process under the name Hydrodec. Hydrodec Group was subsequently formed and listed in 2004 on the London Stock Exchange to commercialize the technology worldwide.
Hydrodec claims the process produces transformer oil that tests better than new, and that it completely eliminates polychlorinated biphenyl, toxic chemicals banned under international regulations. Transformers are used for switching electrical supply from low to high voltage for transmission over long distances and back to low voltage nearer to end users. Transformer oil insulates and cools transformers.
Hydrodec’s decision to exit Australia followed a 2018 business review.
As a result of its strategic review last year, the board decided that with the sub-scale capacity of the Australian plant, the impact of the business on management bandwidth and the limited and fragmented domestic market providing significant feedstock challenges, shareholder equity was better invested behind the U.S. growth plans, and it therefore initiated a formal process to sell the group’s Australian assets and business, Hydrodec said this week.
The Australian-base hydrotreater has a capacity to produce 20,000 liters per day and a footprint of about 120 square meters. It is situated on land owned by rerefiner Southern Oil. It was moved to that site in Wagga Wagga (about 450 kilometers southwest of Sydney) from nearby Young in 2015, and Southern operated the plant on a toll basis for Hydrodec.