REG - Haydale Graphene Ind - Haydale US placed into insolvency process

Haydale Graphene IndustriesAnnouncement

10/02/2025 07:00

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RNS Number : 4271W  Haydale Graphene Industries PLC  10 February 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

 

Haydale Graphene Industries plc

('Haydale' or the 'Group')

Haydale US placed into insolvency process

 

Ammanford, 10 February 2025 - Haydale (AIM: HAYD), the advanced materials
group, announces that, further to the Group's announcement of 23 December 2024
regarding the completion of the reconstituted Board's business review, the
Board has lodged the necessary filings in court in the state of Georgia (the
"Court") to place its wholly owned subsidiary, Haydale Ceramic Technologies
LLC, ("HCT") into a corporate insolvency process under Chapter 11 subchapter V
of the United States ("US") Bankruptcy Code, and a Court hearing is expected
to be held over the next few days to consider the commencement of the process.

 

Under the protection of the Chapter 11 subchapter V process, the Group then
intends to proceed to file a proposed plan with the Court to sell the assets
of HCT through a court supervised process pursuant to section 363 of the US
Bankruptcy Code (the "Plan") via a public auction.  This is seen by
management as the best means of realising maximum value for those assets and
giving the greatest potential for cash to be returned to Haydale (which has an
outstanding intercompany debtor balance within the US sub group of £12.8m to
the Group (the "Intergroup Balance")) after all liabilities of HCT have been
settled, albeit there can be no guarantee of any such outcome. The Group has
received several expressions of interest from third party companies that are
expected to participate in the process.

 

Chapter 11 subchapter V is a court-supervised process for small companies that
provides protection from pre-existing creditors whilst the sales process is
effected. During this process, HCT will remain in possession and control of
its assets to allow the business and operations to continue uninterrupted.
 It is anticipated that HCT will remain in Chapter 11 for a period of up to
90 days; HCT has sufficient access to working capital to fund itself through
this process.

 

HCT comprises the Group's Silicon Carbide and cutting tool manufacturing
facility based in Greer, South Carolina, with sales offices serving the North
American, European and East Asian markets.  In the Group's results for the
year to 30 June 2024 Haydale US generated revenues of £3.3m, making pre-tax
losses of £0.8m, and had net liabilities of £4.7m at the same balance sheet
date.

 

Over the last few years, the Group has strategically repositioned its US
operations by expanding focus from silicon carbide (SiC) powder sales to the
manufacture and distribution of advanced cutting tools. This transition aimed
to enhance value by moving up the supply chain and capitalising on the growing
demand in sectors such as aerospace and automotive.  Despite these strategic
initiatives, the expected growth in the Group's US operations has not
materialised. It has become clear to the reconstituted Board that the previous
management team's confidence in the US business' ability to convert the
pipeline on a timely basis was overly optimistic and not reflective of the
Group's operational preparedness or knowledge of market conditions. Despite
efforts to improve the performance of the US business, the Board expects HCT
to remain loss-making beyond FY25 and has concluded that divestment of the US
operations is in the best interests of the Company and its shareholders.  In
arriving at this decision, the Directors considered other possible scenarios,
though concluded that the time required, costs and intervening persistent cash
drain on the Group would not be justified.

 

The chosen course of action will significantly reduce overhead costs and
operational complexity, contributing to the Group's goal of achieving improved
profitability and cash flow in FY25, in order to protect Haydale's core
business. Substantial cost savings in FY25 will be realised through the
elimination of ongoing operating losses and associated overheads in the US
business.

 

The remaining Intergroup Balances and investment not already provided against
by Haydale as at 30 June 2024 will be provided against in full in the interim
accounts to 31 December 2024.

 

Following the above process, the sale of the Group's South Korean Subsidiary
as announced on 23 December 2024, and the exit from the Thailand operations
effected earlier in January 2025, Haydale will comprise the Group's UK based
nanomaterials business that facilitates the integration of graphene and other
nanomaterials into the next generation of industrial materials and commercial
technologies, incorporating Haydale's rich base of c100 patents.

 

Further announcements will be made at the appropriate time.

For further information:

Haydale Graphene Industries plc

Simon Turek, Chief Executive
Officer
Tel: +44 (0) 1269 842946

Gareth Kaminski-Cook, Non-Executive Chair

Patrick Carter, CFO

www.haydale.com (http://www.haydale.com)

Cavendish Capital Markets Limited (Nominated Adviser & Broker)

Julian Blunt / Edward Whiley / Trisyia Jamaludin, Corporate
Finance        Tel: +44 (0) 20 7220 0500

Andrew Burdis, ECM

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