# Powerhouse Energy Group PLC Q&A with CEO Keith Allaun (LON:PHE)

- Link: https://www.directorstalkinterviews.com/powerhouse-energy-group-plc-qa-ceo-keith-allaun-lonphe-2/412746567
- Published: 2018-03-01T11:57:30+00:00
- Author: Amilia Stone

**Powerhouse Energy Group PLC** (LON:PHE) Chief Executive Officer Keith Allaun caught
up with DirectorsTalk for an exclusive interview to discuss the elimination of the
Hillgrove overhang, the MOU with Wrightbus and their share price

 

**Q1: You’ve just published some great news really with the elimination of Hillgrove
overhang and the MOU with Wrightbus, can you talk us through those?**

**A1**: I think that both of those are important items of note, the first being 
the major overhang that existed by virtue of the nearly 300 million shares that 
were due to Hillgrove on Valentines day of this year, as a matter of fact. We were
able to place those privately in a transaction about 10 days ago in a way that while
it did create some significant downward pressure on the stock price, it was able
to effectively get that overhang of that 300 million shares off the books and put
those shares out into the trading market.

A lot of shareholders don’t understand the value of getting rid of overhangs, our
Chairman for instance had occasion to have an overhang at his company for something
in the neighbourhood of 2 years and what happened was that their stock price remained
depressed for nearly 2 years because people kept wondering when that overhang was
going to go away. Every time they would publish good news, the person that was controlling
that overhang of stock, that excess stock, would put additional stock into the market
and effectively dampen down the upward pressure that the good news brought.

So, we recognise this as being a strategic opportunity, Hillgrove welcomed the chance
to have the majority of these shares placed for them rather than try to sell them
into the market individually and they’ve been exceedingly cooperative. The other
thing that that gave us is that that gave us control of the remaining portion of
Hillgrove’s shares in our own account, so we manage those shares over a period of
the next 6 months they’ve agreed to a lock-in on those shares, it represents a small,
small portion of their original holding. Having that overhang go away from a strategic
perspective over the long-term was an absolute necessity and at some point we were
going to have to pull the band aid off, if you will, and deal with the fall out 
that always associates something like that.

So, we did it, it’s had a significant effect on the share price but in fact, if 
one looks back a couple of months ago, I think that the share price began to erode
because people recognised that, at the beginning of the year, Hillgrove was coming
up on its anniversary date of receiving those 300 million shares and people began
to sell out. In a market like AIM when people begin to sell, downward pressure is
in my estimated 5-10 times greater than when people are buying, an example being
yesterday there were more people buy orders than there were sell orders and the 
stock still closed down. Part of that is driven by market phycology and it’s driven
by the mechanics of the market.

The reality is that nothing fundamentally has changed with the company, other than
we are hitting our marks, we are making good on our promises to drive this forward,
achieve commercialisation, achieve planning and permitting of our commercial site
in the North West and moving aggressively forward in the engineering programme. 
We’re looking to start earth works over the next several months and ordering pieces
of kit for the first Distributed Modular Gasification DMG system in the UK. So, 
as the pioneers of hydrogen from waste in the UK, we’re positioned exactly where
we need to be, we’d love for the share price to be more reflective of the value 
that we believe the company represents but we also know that by continually hitting
our marks by kicking goals, that’s ultimately going to happen.

One of those marks, if you will, was the MOU that were able to sign with Wrightbus
this week. For those that don’t know, Wrightbus is a leading manufacturer of buses
worldwide, they have manufacturing facilities around the world, they have one in
Northern Ireland, and they are actively involved in developing hydrogen fuel-cell
buses. We, of course, are actively involved in deriving hydrogen from waste and 
so, we were able to establish a neutral area of interest which was creating a turn-
key solution for cities and councils and communities that we’re looking to upgrade
their diesel bus fleets to hydrogen fuel-cells but weren’t certain where they were
going to get the hydrogen. Hydrogen is currently somewhere between 4-5 times more
expensive than diesel or petrol and we, through our Distributed Modular Gasification
process, our DMG system, are able to generate hydrogen at the same cost as diesel
and so, that changes the market economics dramatically.

So, if we approach a turn-key solution with a provider with a user of hydrogen like
Wrightbus, with a provider of hydrogen like Powerhouse Energy Group, then all of
a sudden, you’ve got the perfect convergence of technologies and the perfect outcome.
We get to eliminate waste in a community, utilising waste that that community is
generating, convert that into hydrogen, use that to fuel a fleet of buses and effectively
a create a virtuous circle.

People are not aware of the fact that many of the major capitals throughout Europe
are starting to see a significant decline in their rolling stock fleets, their bus
fleets, and are looking at how they migrate away from diesel because of the recognition
that diesel is causing such significant challenges from a particulate matter stand
point. This very day, today in Germany, a court is going to decide if the various
cantons have the legal authority to ban diesel vehicles from the road some days 
when air pollution is too high, cantons have already made the decision to do that,
they’ve already made the decision to ban diesel vehicles. Now, that decision has
been appealed to their Supreme court, so a decision is going to be heard today in
court and the fact that places like Germany, and places like London with the congestion
tax and things of that nature, are recognising that we simply can’t have diesel 
vehicles in the city centres because it creates too much pollution. They need to
find solutions that make sense and certainly for public transport and for long-haul
trucking, things of that nature that we refer to as industrial transportation, those
are places where hydrogen fuel-cells are going to be adopted rapidly and we’re seeing
that happen now.

So, by virtue of us being able to establish a relationship with a company like Wrightbus
to say, look let’s go in on these things together, where we’re offering not only
50-500 buses but we’re also offering DMG hydrogen creation solution, it simply makes
all the sense in the world.

 

**Q2: Just going back to the share price, you’re obviously well positioned now, 
the elimination of the Hillgrove is sorted, and you’ve just had great news with 
Wrightbus. What do you think is going on there with the share price?**

**A2**: It is a bit of a conundrum and it’s something that we scratch our heads 
over. The reality is in places like AIM market, there are flavours of the day periodically,
but again I think that what’s really important is that one looks at the fundamentals
of the business. Are there market drivers that indicate there’s a potential successful
market for this company? Are there market driver and indicators that indicate that
this company can provide a solution that the market is looking for? In both of those
instances, the answer is absolutely.

The hydrogen economy is one in which major transportation providers have made huge
commitments, billion and billions of euros of commitments, to unleashing the hydrogen
economy. So, we recognise that operating therein makes all the sense in the world,
coupled with the fact that we’ve developed a system that is profitable from day 
1, simply by virtue of selling private wire electrical power while waiting for the
need for the hydrogen to develop. If we were to do something in conjunction with,
for example, a bus tender in Eastern Europe, we would build directly into hydrogen
production but one of the first steps along the way is electrical generation to 
supply our own needs of our system and so the system is profitable literally from
the day it’s turned on. We are able to sell excess electricity, when we’re generating
1.2 tonnes of hydrogen we’re generating 1.1 megawatts of exportable electricity 
that can be sold either on private wire or into the national grid, as needed, at
any location.

So, we’re able to take advantage of leading market trends like the distributed electrical
grid, like distributed hydrogen generation and significant political issues like
saving the earth. I think the idea that companies can get away with ignoring their
social responsibility to do something worthwhile for the planet and do something
worthwhile for the planet in a profitable manner, I think those days are going to
be limited.

So, you start seeing companies making significant investments to figuring out how
they play a role in eliminating greenhouse gases, how they play a role in eliminating
plastics that are going into our ocean, how they play a role in getting rid of end-
of-life tyres and components of the waste stream which heretofore have been sent
to landfill or, in my estimation, worse cases are sent to incinerators.

So, I think that the time has come and the message will get through to people, it’s
a matter of time and I can only ask Powerhouse Energy Group’s shareholders to remain
patient because we’ve got the right idea, the time is right and the circumstances
are right for this company to break out and start moving forward very aggressively.

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