Altech targets US$70m project debt for Malaysian HPA plant
Perth, Aug 17, 2016 AEST (ABN Newswire) - Altech Chemicals Limited (Altech/the Company) (
ASX:ATC) is pleased to announce that the Company's targeted debt financing for its proposed Malaysian high purity alumina (HPA) project has increased to US$70 million (previously US$60 million).
Highlights
- Altech targeting total project debt of US$70 million
- Export credit cover (ECA) component increased to US$60 million
- Residual debt component now up to US$10 million
- Sole lender structure proposed for the entire debt portion of up to US$70 million
- Simplified debt financing and attractive ECA-covered component
The export credit cover (ECA) component to be covered by the German export credit agency (ECA), Euler Hermes Aktiengesellschaft (Euler Hermes) has increased from US$40 million to US$60 million. Accordingly, Altech has reduced the targeted amount for the remaining uncovered debt portion from US$20 million to US$10 million, which has resulted in a revised total project debt target of US$70 million.
In accordance with the positive cursory pre-assessment undertaken by Euler Hermes (please refer to ASX Announcement of 3 August 2016 for details), the Company's ongoing due diligence process has the objective of an application for ECA-cover incorporating the abovementioned adjusted debt structure.
Furthermore, German government-owned KfW IPEX-Bank, mandated to provide debt structuring and advisory services to the Company, has proposed a simple and cost effective "sole lender" debt structure whereby the entire US$70 million of project debt is proposed to be provided exclusively by KfW IPEX-Bank (subject to ongoing due diligence and respective loan approval).
The interest rate of project finance debt supported by ECA cover is very attractive, consequently the overall cost of debt for the Company shall be reduced compared to the originally contemplated structure.
Table 1 (see link below) provides comparison of project target debt structures subject to final due diligence results.
Project Financing background
Since January 2016, Altech has been working with German government-owned KfW IPEX-Bank on project finance structuring for its proposed Malaysian high purity alumina project, including detailed bank modelling. In parallel the Company appointed engineering, procurement and construction (EPC) contractor, German engineering group M+W Group (M+W) for project design and construction. Initially the Company contemplated total project debt of US$60 million, US$40 million of which would be subject to ECA cover (refer ASX announcement 10 December 2015 for details).
In June 2016, M+W made representation to German export credit agency Euler Hermes for an increase in the proposed export credit cover contract value of the project, from the originally contemplated amount of US$40 million to US$60 million. The representation was based on the significant German and European project content (plant, equipment and services) and overall benefit of the project to German industry. In line with the results of the cursory pre-assessment undertaken by Euler Hermes (please see below for further details), Altech has the approval to conduct the respective due diligence process with the target to make application to Euler Hermes for US$60 million of ECA cover.
Recently Altech announced a positive pre-assessment by the German Government inter-ministerial committee (IMC) and Euler Hermes of the Company's export credit project finance application (refer ASX Announcement dated 3 August 2016 for details). On 10 August 2016, due diligence (DD) consultants were appointed to undertake the definitive technical, market and legal review of the project on behalf of the proposed financier, Germany's government-owned KfW IPEX-Bank supported by German export credit agency Euler Hermes.
Altech managing director Mr Iggy Tan said, "Increasing the ECA application amount to US$60 million for our proposed HPA project is an extremely positive outcome for the Company and testament to the projects financial robustness. A single project lender will significantly simplify and streamline financing, documentation and securitisation. Also, the increased proportion of ECA covered debt will reduce the overall interest rate that will apply to project borrowings. The equity component of the project will be finalised when detailed design capital cost of the project is completed.
"The next steps for project financing include a formal application for the in principle ECA cover and the completion of the bank-initiated independent due diligence", he concluded.
To view tables and figures, please visit:
http://abnnewswire.net/lnk/TIR4PNH2
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.
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