Altech Chemicals Ltd (ASX:ATC) Listed Green Bond Preparations Progressing Well

Perth, Australia, Feb 9, 2021 - (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (HAM:A3Y) is pleased to advise that preparations for its proposed listed green bond offering of ~US$144 million, to provide additional financing for its Malaysian high purity alumina (HPA) project are on track and progressing well.

Highlights

- Listed green bond targeting an offer of ~US$144m

- Preparation progressing well and on track

- HPA project 49% less carbon footprint than conventional HPA

Altech is working closely with London based structuring agent, Bedford Row Capital PLC (Bedford Row) and Bluemount Capital (WA) Pty Ltd (Bluemount) to prepare for a Bond offering. Preparations for the offering commenced in December 2020, and have now progressed to a point where due diligence is complete - including an environmental social governance (ESG) audit; a draft facility agreement is distributed; and a preliminary offering document is being reviewed. Altech is aiming to raise US$144m from the proposed bond issue, of which US$100m will be used as secondary debt for its Johor HPA plant (with US$44m to service bond interest during the HPA plant construction phase - see Figure 1*). Senior project finance of US$190m is already committed from German government owned KfW IPEX-Bank.

The bond issue process consists of the initial preparation phase (currently underway), where legal documentation, structures, teasers, draft investment memorandum, and comprehensive corporate presentation packs are developed and then distributed to prospective subscribers. This is followed by the opening of a data room for a bookbuild phase, which will only initiate upon positive "soft soundings" during the preparation phase, and will optimally be conducted in a period of positive overall market sentiment.

The final phase of the bond issue is execution, when commitments are settled and bond proceeds formally deposited with the SPV Co. (closing). Application for listing the bonds on the Frankfurt Stock Exchange would be made following the closing. Preparation work is progressing well and on schedule.

Background

Increasingly green bonds are being used to finance new and existing projects which deliver environmental benefits and a more sustainable economy. As announced on 20 May 2020, Altech's HPA project has been formally assessed as "green" by the independent Centre of International Climate and Environmental Research (CICERO) based in Oslo, Norway. Compared to conventional HPA processing, Altech's disruptive HPA production technology is estimated to deliver a ~49% reduction in the comparable carbon footprint, and use ~41% less energy. Also, the primary end-use for Altech's HPA is targeted for climate change products, such as LEDs lights and lithium-ion batteries.

As illustrated in Figure 1 below*, a Special Purpose Vehicle (SPV Co.) would be incorporated and managed by Bedford Row Capital (or its nominee) as the proposed bond Issuer. From a US$144m issue, US$44m would be retained by the SPV to service bond coupon (interest) payments during the period of Altech's HPA plant's construction and commissioning. The US$100m balance of proceeds is lent by the SPV Co. to Altech's Malaysian subsidiary (Altech Chemicals Sdn. Bhd.) to part-fund plant construction costs and/or for working capital. It is envisaged that the bond will be for an initial 5-year term, and typical of this type of funding would likely be re-financed at a lower coupon (interest rate) towards the end of the term. The SPV Co. would take second lien security behind senior lender KfW IPEX-Bank.

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 (Al2O3) through the construction and operation of a 4,500tpa high purity alumina (HPA) processing plant at Johor, Malaysia. Feedstock for the plant will be sourced from the Company's 100%-owned kaolin deposit at Meckering, Western Australia and shipped to Malaysia.

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. Increasingly HPA is used by lithium-ion battery manufacturers as the coating on the battery's separator, which improves performance, longevity and safety of the battery. With global HPA demand approximately 19,000t (2018), it is estimated that this demand will grow at a compound annual growth rate (CAGR) of 30% (2018-2028); by 2028 HPA market demand will be approximately 272,000t, driven by the increasing adoption of LEDs worldwide as well as the demand for HPA by lithium-ion battery manufacturers to serve the surging electric vehicle market.

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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