Altech Chemicals has potentially overcome some CAPEX hurdles for the construction and development of its HPA plant in Malaysia, executing a non-binding stream financing term sheet with a US-based global investment group for USD$60m. With USD$190m already committed by the German Government-owned KfW IPEX-Bank and a term sheet for mezzanine debt from a global merchant bank for USD$90m, it is unlikely that Altech will need to raise much equity to kick -off project.
Altech Chemicals has executed a USD$60m stream finance term sheet with a US-based global investment group to assist with the development, construction and working capital requirements of its proposed high purity alumina plant in Malaysia.
The non-binding stream finance facility agreement is a structured alternative financing arrangement, where the US-based investment provider agrees to advance Altech funding, in exchange for a percentage of future gross sales of the HPA product.
The fund provider may then make ongoing payments for each unit of product delivered under the streaming agreement for the life of the project.
Altech says the facility is structured to operate in conjunction with the company’s 10-year off-take sales agreement already in place with Mitsubishi Australia.
The facility will need to be acceptable to the senior debt provider, German Government-owned KfW IPEX-Bank, who has already committed USD$190m for project financing.
The company has also recently signed an indicative term sheet for mezzanine debt financing from a global merchant bank equal to USD$90m, bringing the total project financing status to USD$340m.
In October last year, Altech announced it had reached a positive final investment decision for the development of its HPA plant in Malaysia, showing a CAPEX requirement of USD$298m.
With this week’s execution of a term sheet for stream financing, the company has now potentially overcome this CAPEX threshold with some room to move.
Altech’s Managing Director Iggy Tan said: “The Company is extremely pleased with the interest that is being shown from a variety of financiers in our HPA project, as is demonstrated by the term sheets received to date.”
“We remain committed to pursuing an optimal financing structure for the project and will continue to keep shareholders informed of developments”.
The company recently received Malaysian Government approval to secure a 4-hectare site to construct its HPA plant, in the country’s Tanjung Langsat Industrial complex in Johor.
Altech laid down A$5.1m to secure a 30-year lease at the site, with an option to renew for another 30 years.
The site is located across the water from Singapore, where the company will deliver a large proportion of its HPA product to be used in high tech manufacturing of a wide range of end-user products such as LED lights, mobile phones and coatings for lithium-ion battery separators.
Altech is investigating all financing options with the various debt product providers in an attempt to keep any equity portion required to fund the project to an absolute minimum.
With the company’s feasibility study showing walls of cash coming in immediately post first production, Altech is banking on the project being able to handle a solid chunk of debt in preference to any significant share dilution via big equity raises.