Altech Chemicals Ltd (ASX:ATC) Initiates Listed Green Bond Project Funding Option

Perth, Australia, Aug 20, 2020 - (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (HAM:A3Y) is pleased to announce that it has initiated a listed green bond project funding option. The Company has mandated Bluemount Capital (WA) Pty Ltd (Bluemount), which will work in conjunction with its London based partner Bedford Row Capital (Bedford), as structuring agent, to prepare a Bond Structuring and Execution Plan for an offering of asset-backed (second lien) listed "green" bonds to the European bond market.

On 20 May 2020, Altech announced that its high purity alumina (HPA) project had been formally assessed as "green" by the independent Centre of International Climate and Environmental Research (CICERO), based in Oslo, Norway. This positive project assessment, formally termed a "second opinion", confirmed that Altech's HPA project is of a type suitable for finance via green bonds. The project is appropriate to be considered by investors that participate in the green bond market, the size of which is approaching US$250 billion annually and a large portion of which is present in Europe.

The Bond Structuring and Execution Plan will provide a definitive execution program for a green bond offering, and will present firm recommendations for the key terms that will have been derived from preliminary market soundings, these would include:

Offer Size: minimum US$100m
Term to Maturity: at least 5 years
Security: second lien, behind senior lender KfW IPEX-Bank
Secondary Market: likely the Frankfurt Stock Exchange

Background

Despite the negative impact that the COVID-19 pandemic has had on global markets since March 2020, the Company has continued to focus on bringing about the close of project financing for its Malaysian HPA project, whilst ensuring that stage 2 early works construction activities were completed at the HPA plant site. In addition to the US$190 million senior project finance loan facility available from German government owned KfW IPEX-Bank, the Company continues to pursue multiple additional subordinated debt funding options. The use of bonds to secure a secondary level of project finance debt could be an alternative to bank mezzanine debt.

An advantage of bonds over bank finance is that only the interest (coupon) is paid to bond holders during the term, whereas mezzanine bank debt requires the payment both principal and interest over the loan term. Bonds are typically re-financed at the end of the term, and in the case of start-up projects such as Altech's HPA project, the coupon (interest rate) payable on re-finance would expect to be lower because project construction and commissioning risk is removed, and an operating track-record for the project would be in place.

Work on satisfying the outstanding requirements of the previously announced US$90 million mezzanine loan facility with preferred mezzanine lender Macquarie Bank (Macquarie) remain on-going. Technical and market due diligence is complete, however Macquarie has requested that Altech secure pre-sales of a proportion of its planned future HPA production to an end user at fixed product prices, to demonstrate some pricing transparency in an otherwise opaque market. The Company continues to engage with a number of European electric vehicle sector participants that are potential product end users interested in securing future HPA supply.

Completion of the Bond Structuring and Execution Plan is expected during next quarter. In order to preserve cash, the initial cost of Bluemount's services will be satisfied by way of payment in the form of 733,333 Altech fully paid ordinary shares.

About Altech Chemicals Ltd:

Altech Chemicals Limited (ASX:ATC) (FRA:A3Y) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA) (Al2O3).

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.

Contact:

Corporate
Iggy Tan
Managing Director
Altech Chemicals Limited
Tel: [phone]
Email: [e-mail]

Shane Volk
Company Secretary
Altech Chemicals Limited
Tel: [phone]
Email: [e-mail]

Investor Relations (Europe)
Kai Hoffmann
Soar Financial Partners
Tel: [phone]
Email: [e-mail]

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