ASX-listed high purity alumina, or “HPA” hopeful, Altech Chemicals has taken a giant leap towards securing the remaining financing required for its proposed HPA processing plant at Johor in Malaysia, with preparations well under way for an approximate US$144 million listed green bond instrument.
The Perth-based company is looking to set up a Special Purpose Vehicle, or “SPV” as the proposed bond issuer that it says would be managed by London-based Bedford Row Capital.
From the US$144 million targeted to be raised from the proposed green bond issue, US$44 million would be retained by the SPV to service bond coupon, or interest, payments during the period of Altech’s HPA plant construction and commissioning.
CAPEX for construction of the company’s Johor HPA plant currently stands at US$280 million.
The balance of the green bond proceeds – US$100 million – would be lent by the SPV to Malaysian subsidiary, Altech Chemicals and used as a secondary debt facility for the partial funding of plant construction costs and or working capital.
Altech says due diligence on the green bond offering, including an environmental social governance audit, has been completed and that the company, alongside Bedford Row Capital and Bluemount Capital’s WA arm are now working on a myriad of green bond offer documents.
Following the initial preparation process, Altech will be keen to test investor appetite for the offer. Should it receive positive soundings from debt capital markets, the company says a data room will be made available to prospective participants for a book build.
In the event its green bond offer is successful, Altech says it plans to then list the bonds on the Frankfurt Stock Exchange.
Green bonds, which are a type of fixed-income instrument, were created to raise money to help fund projects that are deemed to deliver environmental benefits. The bonds are typically asset-linked and backed by the issuing company’s balance sheet.
Altech reported last year that its proposed Johor HPA project had been formally assessed as green by the Centre of International Climate and Environmental Research based in Oslo, Norway.
According to the company, its “disruptive” HPA production technology is predicted to achieve an approximate 49 per cent reduction in the carbon footprint and use approximately 41 per cent less energy compared to conventional HPA processing.
Senior project finance of US$190 million, provided by the German Government-owned KfW IPEX-Bank, has already been nailed down by Altech.
The green bond issuer, being the SPV company, would assume second lien security status behind senior lender KfW IPEX-Bank.
Altech hopes to get the US$280 million Johor 4,500 tonnes per annum HPA plant up and running in a couple of years.
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