Major shareholder backs Altech with $4.3m bond facility

Altech Batteries has locked in the backing of a major shareholder, German-based investment firm Deutsche Balaton AG, by securing funding via a bond note facility for up to €2.5 million (A$4.3m) to further develop its new-age battery projects. 

Altech and Deutsche have agreed for the funding to be provided as bearer bonds, with any funds drawn to incur interest at 7 per cent per annum secured by land Altech owns in Johor, Malaysia.

The funding will enable Altech to progress its promising Cerenergy battery and Silumina battery materials projects and will support the company’s general working capital requirements.

Management chose to go down the funding route rather than the dilutionary path of a share issue.

The Johor real estate is on the market and Altech expects the proceeds will be sufficient for it to repay any borrowed funds. 

The company anticipates it will hold a general meeting in April to obtain shareholder approval to grant security over the Malaysian land. Altech’s fully-owned Malaysian subsidiary has a security trust agreement over the land. The subsidiary company will also provide a guarantee of repayment of the bonds that will mature on October 31, 2026.

Altech revealed last week that it had secured the necessary environmental and construction permit to build the company’s Cerenergy GridPack production facility in Saxony, Germany. It has plans for a 120-megawatt facility, which will produce a battery based on common table salt.

It is now focusing on obtaining the most appropriate project finance deal to build the project, which was recently awarded “Dark Green” certification – the highest rating offered by global ratings agency Standard & Poor’s.

S&P’s certification opened the door for the company to explore potential funding from the huge global green bond market, which has grown exponentially to US$250 billion (A$395b) per year. 

Management believes Cerenergy has the lowest carbon footprint and supply chain requirements of any battery, as its primary component is sodium chloride, table salt’s basic ingredient. 

Altech says using one of the world’s most environmentally friendly raw materials for energy storage technology reinforces its green status.

The company released its definitive feasibility study for the Cerenergy battery project in March last year, which indicated a pre-tax net present value of €169m (A$291m), annual revenue of €106m (A$182m), a €51m (A$88m) EBITDA and a 3.7-year payback period. 

Altech expects to receive strong demand for its salt-based batteries from a range of industries, including data centres and hospitals. It believes the batteries could provide a long-term solution for grid storage.

Management has three offtake agreements in place for its Cerenergy GridPacks, which will account for all the first two years of production, and more than 50 per cent of all GridPacks produced in the ensuing three years.

Altech’s Cerenergy batteries can operate in extreme hot and cold climates, have a lifespan of more than 15 years and are fire and explosion-proof. 

The company is also pushing forward with its Silumina Anodes project, which adds high-capacity silicon into lithium-ion batteries for the electric vehicle market. It says the technology delivers lighter, more energy-dense batteries with reduced greenhouse gas emissions.

The company announced in October it had supercharged its alumina-coated silicon anodes to boost the energy capacity of lithium-ion batteries by 55 per cent after combining graphite with its high-tech anodes.

Management says the head-turning results stem from its strategy to coat silicon particles with alumina, overcoming previous drawbacks associated with using silicon as an anode material.

Altech appears hell-bent on succeeding with its high-tech projects. Having funding in place gives the company some breathing space to source the best project finance deal to build the Cerenergy project - adding some salt to the battery storage mix.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au