German Equity Strategy Update - Altech Advanced Materials
Youbisheng Green Paper AG, the Frankfurt stock exchange listed company in which Altech has acquired a 29% equity interest, has now officially changed its name to Altech Advanced Materials AG (AAM). The listing code for AAM on the Frankfurt exchange is AMA1. A new web site for the company has been established and can be accessed at www.altechadvancedmaterials.com.
AAM is aiming to raise approximately of US$100 million, which if successful would position it to acquire up to a 49% interest in Altech's high purity alumina (HPA) project. Initially, AAM intends to secure up to EUR69.4 million (US$75.7 million) via a concurrent rights issue and external share placement ("RIEP"). AAM has advised Altech that a draft RIEP prospectus was lodged with the German regulator (BaFin - Federal Financial Supervisory Authority) during September 2019, and that feedback from BaFin's review is being incorporated into a final version of the prospectus. Discussions with potential German lead managers to co-ordinate the RIEP are continuing and AAM has advised that it is aiming to complete the REIP by early December 2019.
An initial roadshow to showcase Altech's HPA project and the investment opportunity for AAM was conducted in Germany during September 2019. The opportunity for potential investors to gain direct exposure to Altech's HPA project via a shareholding in AAM - a Frankfurt listed public company - was well received. Audiences were impressed with the US$190m of committed senior debt funding from German government-owned KfW IPEX-Bank; the support of Euler Hermes - the German government export credit agency; the award of the contract for construction of the HPA plant to SMS group of Dusseldorf, Germany; and the Company's already significant German shareholder base (approximately 20%) comprising Deutsche Balaton AG, Delphi, SMS Investments and various other German and European retail shareholders.
AAM's option to acquire up to a 49% direct interest in Altech's HPA project is an important first step in a longer-term strategy for both Altech and AAM to provide their respective shareholders with exposure to both the HPA market generally, and ultimately to the growing European electric vehicle / lithium-ion battery market. This longer-term vision is demonstrated via the recent announcement by Altech of an invitation from the state government of Saxony, Germany, proposing that it consider the construction of a second HPA plant in the state (see ASX Announcement of 18 September 2019).
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About Altech Chemicals Ltd
HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.
Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.
Altech Chemicals Ltd