Perth, Australia, Oct 26, 2020 - (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (HAM:A3Y) is pleased to announce that it has executed a binding Memorandum of Understanding (MOU) to sell 25% of its wholly owned Germany subsidiary - Altech Industries Germany GmbH (AIG) for EUR 5.0 million (~A$ 8.3 million), to Frankfurt Stock Exchange listed Altech Advanced Materials AG (AAM).
- EUR5.0 million (A$8.3 million) sale of 25% of Altech's wholly owned Germany subsidiary (AIG)
- Acquired by Frankfurt Stock Exchange listed Altech Advanced Materials AG
- Initial cash payment, with balance of consideration payable over 3 years
- AIG will have the rights to use Altech's HPA manufacturing technology
- EUR20.0 million (A$33 million) valuation of AIG, with Altech retaining 75%
The consideration payable for the sale is structured as follows:
1. Initial Cash Consideration of EUR 250,000 (~A$415,000) upon the signing of the Share Sales and Purchase Agreement and a Shareholder Agreement between ATC and AAM.
2. Deferred Consideration: of EUR4.75 million (~A$7.92 million), payable as follows:
- Three equal instalments of EUR1.583 million (~A$2.63 million) paid on each annual anniversary of the payment of the Initial Cash Consideration;
- Interest, paid quarterly to ATC at the rate of 3% p.a. (~A$240k p.a.) on the outstanding Deferred Consideration;
- AAM may pay the outstanding Deferred Consideration in full to ATC at any time without penalty; and
- The Deferred consideration will be secured via the pledge by AAM of the 6,250 AIG shares (i.e. should the Deferred Consideration not paid be paid in full at or before the third anniversary of the Immediate Cash Payment the AIG will fall back to ATC and all consideration paid by AAG will be retained by ATC).
3. AAM will proportionally participate in all future equity raises by AIG on the same terms as ATC, for the purpose of funding its working capital and envisaged business development activities, such as the exercise of its option to acquire industrial land at the Schwarze Pumpe Industrial Park, Saxony, Germany.
The transaction is approved by the supervisory board of AAM, and by the board of Altech. The 25% sale values AIG at EUR20.0 million (~A$33 million), with Altech retaining 75%.
In addition to holding the right to acquire the Schwarze Pumpe Industrial land (ASX Announcement 14 July 2020) and the availability of EUR7.8 million (A$12 million) of grant support from the state of Saxony, Germany (ASX Announcement 13 October 2020), AIG will also have the right to use Altech's high purity alumina (HPA) manufacturing technology via a license agreement with Altech, including any future development of Altech's proposed Anode Grade HPA; a fee will be payable by AIG to Altech for the use of these rights.
Commenting on the sale, Altech managing director Mr Iggy Tan said "securing AAM as a 25% shareholder of AIG will deliver benefits for each of the companies. AIG will now have a German shareholder (AAM) which will better position it to apply for various European Union and German manufacturing incentives - as Europe brings its supply chains closer to home to increase critical raw materials self-reliance, such as materials that are used in the manufacture of lithium-ion batteries. For Altech, an AIG that is co-funded and will be championed in Germany and Europe by an extremely supportive German shareholder (AAM) was an opportunity not to be missed.
Altech continues to remain focussed on delivering the close of funding for our Johor HPA plant, however selling 25% of our German subsidiary to AAM will both assist in the future funding of AIG and with the due diligence and feasibility study work that has been initiated for a second HPA plant in Germany."
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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.
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