Altech Chemicals Limited (Altech/the Company) (ASX:ATC) (FRA:A3Y) is pleased to provided an update on funding for its proposed Malaysian high purity alumina (HPA) plant and associated kaolin mine in Meckering, Western Australia (the Project).

Highlights

- US$190 million senior debt package completed

- FIDS due diligence data room established

- Mezzanine debt work stream commenced

- Joint venture option being advanced

- Project equity work stream to target quality equity partners commenced

Senior Debt Package

On 2 February 2018, the Company announced that it had executed a commitment letter together with agreed terms and conditions formalising the US$190 million senior debt package with German government owned KfW IPEX-Bank. The path to finance close and the ability to draw-down on the senior debt package involves the Company satisfying various conditions precedent, which includes securing a balance of funds for the Project. The options and proposals currently being assessed by the Company include introducing an additional amount of mezzanine debt (unsecured and subordinate to the senior KfW IPEX-Bank loans); taking on a project partner; a traditional equity issue by the Company; and the sale of a royalty stream over future HPA sales revenue. A healthy level of interest in the Company and the Project from potential investors and financiers has been demonstrated to date. A data room containing all project and due diligence information (including the Final Investment Decision Study) is established and has been made available to numerous groups to assist with respective due diligence activities.

Mezzanine Debt

A number of groups have been appointed to assist the Company with identifying potential financiers and securing indicative terms for proposed mezzanine debt, which will be unsecured and subordinate to the US$190 million senior loan package. The Project is extremely cash positive and the Company is targeting mezzanine debt of between US$70 and US$120 million, which modelling demonstrates the Project can support. To date there has been strong interest and already numerous financiers have commenced accessing the Company's data room. Some groups have commenced more detailed due diligence activities such as site visits (Malaysia and Australia) and have had (or have arranged) direct discussions with KfW IPEX-Bank, due diligence consultants, the off-taker, and EPC contractor. In addition to the mezzanine debt market, there is also interest in financing from the convertible bond market. Altech is also considering other sources of funding such as a royalty stream and a US denominated bond issue directly at the project level. Work streams with potential financiers are expected to continue over the next quarter.

Joint Venture

The Company is also exploring the option of a project level joint venture investment with several industrial groups, which if successfully concluded is likely to result in a major reduction in the amount of equity contribution required from Altech shareholders as part of the balance of funds. A partial sale at the project level in conjunction with mezzanine debt is an attractive option for the Company to secure the majority of the balance of funds, as it will significantly reduce shareholder dilution. The Company is targeting potential joint venture partners that have speciality industrial materials experience and a strong balance sheet. Various meetings have already taken place with potential partners and due diligence has been initiated.

Project Equity

Several groups have been appointed to assist the Company with the anticipated equity raising that will likely be necessary to secure the total balance of funds required. The final equity amount has not yet been determined as it will depend on the amount of mezzanine debt secured, the outcome of the joint venture and project sell down option, any royalty stream sale, plus final financing costs, the working capital requirement and any additional contingency amount. Altech is targeting potential equity partners that share its longer-term vision for the Company to be a substantial force in the global HPA market. Roadshows and presentations by Company management will continue in the various target regions like Europe, USA, Australia and the Asia-Pacific in the coming months. Since the KfW IPEX-Bank debt funding was confirmed in early 2018, there is heightened interest in the Company and its HPA project and a number of large equity investment groups have been presented to; several of which have initiated detailed due diligence.

Altech managing director Iggy Tan said that the Company is encouraged by the interest and the rapid recognition of the potential of the high purity alumina market. "We currently estimate that it may take until mid-2018 to determine the optimal funding solution for our HPA project. The Company's objective remains to achieve a robust project funding solution that maximises shareholder returns and minimises dilution", he said.


About Altech Batteries Ltd

Altech Batteries Limited (ASX:ATC) (FRA:A3Y) is a specialty battery technology company that has a joint venture agreement with world leading German battery institute Fraunhofer IKTS ("Fraunhofer") to commercialise the revolutionary CERENERGY(R) Sodium Alumina Solid State (SAS) Battery. CERENERGY(R) batteries are the game-changing alternative to lithium-ion batteries. CERENERGY(R) batteries are fire and explosion-proof; have a life span of more than 15 years and operate in extreme cold and desert climates. The battery technology uses table salt and is lithium-free; cobalt-free; graphite-free; and copper-free, eliminating exposure to critical metal price rises and supply chain concerns.

The joint venture is commercialising its CERENERGY(R) battery, with plans to construct a 100MWh production facility on Altech's land in Saxony, Germany. The facility intends to produce CERENERGY(R) battery modules to provide grid storage solutions to the market.

    

Contact

Corporate
Iggy Tan
Managing Director
Altech Batteries Limited
Tel: +61-8-6168-1555
Email: info@altechgroup.com

Martin Stein
Chief Financial Officer
Altech Batteries Limited
Tel: +61-8-6168-1555
Email: info@altechgroup.com



Link: Altech Advances Final Stage of Project Financing


Related Companies

Altech Batteries Ltd
             


Related Industry Topics: