NZ businessman Henry bids $A24m for ASX-listed Hydromet

BUSINESSDESK: Auckland businessman Simon Henry has made a A$24 million bid for ASX-listed industrial waste recycler Hydromet Corp, saying the target's board has been stingy with dividends and too generous with its own fees.

Mr Henry, who is the sole director of local chemical logistics firm Chempro Logistics, has already spent some $A3.6m building a 16.6% stake in Hydromet, and is offering 4.8 Australian cents a share for the rest of the company, says a statement lodged with the ASX.

That is a 6.7%premium to yesterday’s closing price, and 9.5% above the six-month volume weighted average price.

The shares rose to meet the offer price in trading today.

The bidder statement claims Hydromet shareholders haven’t been served well, receiving cumulative dividends of $A2.6m in five of the past 11 years, whereas directors total remuneration was $A9.4m over the same period at an annual growth rate of more than 11%.

If Mr Henry is successful in achieving 90% control, which would let him compulsorily mop up the remaining shares, he plans to delist the company and conduct a review of Hydromet’s operations, assets, structure, board composition, remuneration and employees.

“The bidder intends to identify those profitable and non-profitable operations within Hydromet’s business units and areas where synergies with other entities controlled by the bidder may be obtained,” the document said.

“This review may result in a reorganisation of Hydromet’s corporate structure in order to better align Hydromet’s business and operations with those companies controlled by the bidder.”

That potentially opens up opportunities for Chempro Logistics, which is in the process of installing a used lead acid battery recycling plant in Wellington.

The company is a specialist chemicals and logistics company, and recently moved into chemicals trading, opening a procurement office in China.

Last month, Mr Henry incorporated Chempro Trading, which lists him as the sole shareholder and director.

Also last month, Hydromet won a $A1.32m grant from the Australian Federal and New South Wales state governments to help pay for a small-scale lead smelting furnace in Illawarra.

The plant would be used to recover and produce lead bullion from lead oxide paste from the company’s used lead battery operation and other waste streams such as CRT glass.

Hydromet’s directors recommend shareholders take no action until they have considered Mr Henry’s offer.

The company has engaged Gavin Robertson of Kemp Strang Solicitors as its legal adviser.

The offer document says Mr Henry broadly intends to continue the business of Hydromet, won’t make any major changes, and will retain staff.

If he wins more than 50% of Hydromet’s shares, but falls short of the 90% needed to assume full control, he will keep the company on the ASX and will review the board’s make-up, which may see him nominate new directors.

He will also press for it to have at least one independent director as long as it is listed.

If he falls short of majority ownership, he “intends to seek access to Hydromet’s management and board members and establish a dialogue in relation to conducting a review".

Mr Henry will fund the acquisition with cash, though he has a $NZ2m secured line of credit with National Bank that can be drawn on.