Proposed Option and Future Funding
21 June 2023
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Hydrogen Utopia International PLC ("HUI" or the "Company")
Hydrogen Utopia International PLC, a company specialising in turning non-recyclable mixed waste plastic into hydrogen and other carbon-free fuels, new materials or distributed renewable heat, announces that the Company has signed conditional heads of terms ("HoTs") to acquire a substantial minority stake in Carbon Capture and Sequestration Limited ("CCS"), a company which it is anticipated will generate substantial future cashflows for its shareholders and which HUI would utilise in developing its pipeline of waste plastic to hydrogen plants.
HUI has been actively evaluating opportunities to realise its mission to develop pioneering non-recyclable plastic to hydrogen technology with the aim of rolling out plants in Europe and beyond. The cashflows anticipated to be generated by CCS and which would flow to HUI following acquisition, based upon CCS projections, would provide HUI with a stream of positive working capital to fund its operations and the roll-out of projects.
On 31 May 2023, CCS agreed to acquire 95% of a company, licensed and operating as a medical cannabis cultivator incorporated in and with operations in North Macedonia ("Medical Cannabis Cultivator"). The total consideration payable for the Medical Cannabis Cultivator by CCS is €9.5m, payable in instalments of between €1m - €2m on agreed dates between June 2023 and December 2029.
CCS is currently wholly owned by Howard White, an executive director of HUI and a 3.97% shareholder. Under the HoTs, which are subject to final contract and a number of conditions and regulatory approvals, HUI has agreed with CCS, that it will provide a loan of £500,000 to CCS which CCS will use towards the payment of the first instalment of the purchase price for the share capital of the Medical Cannabis Cultivator ("Loan"). Under the HoTs, Howard White has agreed, subject to final contract, to grant HUI an option, to acquire 49% of the issued share capital of CCS in return for the issue of 49 million ordinary shares of £0.01 each in HUI (the "Option"). The Option is exercisable at any time in the period ending 31 October 2024.
Under the HoTs, it has been agreed that the Loan will be repayable on demand if HUI decides not to exercise the Option, the Option is not granted or is terminated or lapses. It has also been agreed that exercise of the Option is conditional, among others, on HUI being satisfied with the results of legal, financial, tax, regulatory and commercial due diligence concerning the Medical Cannabis Cultivator and CCS.
At the point at which it is anticipated that HUI would exercise the Option, it is currently expected that the Medical Cannabis Cultivator will be profit generating and will pay dividends to CCS to help to fund any remaining payment instalments due in relation to the acquisition of the Medical Cannabis Cultivator and to support HUI's ongoing and future operations.
The Medical Cannabis Cultivator has the opportunity to acquire land adjacent to the Medical Cannabis Cultivator which could be used to site an HUI plant from which the Medical Cannabis Cultivator could become an offtaker for electricity. There is also the possibility that an HUI plant could process cannabis residue biomass.
Should HUI exercise the Option, the acquisition of 49% of CCS would represent a material related party transaction due to Howard White's current ownership of it. This announcement is made under and in compliance with Disclosure Guidance and Transparency Rule 7.3.8.
HUI will keep the market updated on the progress of the proposed transaction.
Aleksandra Binkowska, Chief Executive Officer of HUI, commented:
"We are operating in difficult times that only the strongest will survive. I believe this option to acquire a major stake in the CCS business will give us access to much needed cashflow. Thanks to our Director, Mr. Howard White, and his belief in our technology, this deal should help HUI move forward with our goal of building the first plastic to hydrogen facility."
For further information please contact:
Hydrogen Utopia International PLC
Aleksandra Binkowska/Guy Peters
+44 20 3811 8770
Alfred Henry Corporate Finance Limited (AQSE Corporate Adviser)
Jon Isaacs
+44 20 3772 0021
Novum Securities Limited (Broker)
Jon Belliss/Colin Rowbury
+44 20 7399 9400
About Hydrogen Utopia International PLC
HUI aims to become one of the leading new European companies specialising in turning non-recyclable mixed waste plastic into carbon-free fuels, new materials or distributed renewable heat.
A HUI facility uses non-recyclable mixed waste plastic as feedstock and turns it into syngas from which new products and energy can be produced. HUI anticipates that its revenues will be derived from a variety of sources, dependent upon location and configuration of the HUI facilities, including the sale of syngas, hydrogen and other gases, electricity and heat sales, and the payment to it of fees for a given quantity of non-recyclable mixed waste plastic received at a HUI facility.
HUI will target areas where there is significant private sector interest or potential, financial backing is accessible and or where substantial EU and/or government funded sources of grants and loans are or may be available. The global increase in fossil fuel-based energy prices reinforces the need for alternative, price competitive energy sources, which HUI’s business model can provide.
The pressing need to deal with growing amounts of waste plastic combined with a real momentum in the use of hydrogen from renewable sources may pave the way for a rapid deployment of and investment in HUI facilities.