Altech Chemicals Ltd (ASX:ATC) has provided an update on the debt funding activities for its high purity alumina (HPA) project, following a meeting with KfW IPEX-Bank in Stuttgart, Germany.
Altech currently estimates that its proposed HPA project will support approximately US$60 million of debt.
To provide structuring and financing services in relation to the provision of senior debt funding the company has mandated German government-owned bank KfW IPEX-Bank Gmbh (KfW IPEX-Bank).
Altech has been working closely with KfW IPEX-Bank since January 2016 as part of the bank’s comprehensive due diligence of the company and the project.
With KfW IPEX-Bank’s support, the company said that it intends to make formal application under the export credit insurance guarantee scheme of the Federal Republic of Germany in relation to approximately US$40 million of project debt.
The application will be lodged within the quarter and will be prepared by KfW IPEX-Bank for submission to Euler Hermes, the company mandated to administer the scheme.
The US$40 million application amount is based on the company’s estimate of the project capital expenditure that qualifies for ECA cover under the scheme’s prevailing rules.
Interest rates charged by lenders on debt that is supported by ECA cover is typically at attractive conditions as the repayment of the debt is insured; also long tenure is usually available in accordance with OECD guidelines.
Additional debt of ~US$20 million is estimated at prevailing commercial terms and rates of interest.
KfW IPEX-Bank has commenced independent debt and project loan modelling, which will be included in the ECA cover application.
Iggy Tan, managing director for Altech, commented:
“We have a great banking partner in KfW IPEX-Bank; all things going well, we expect to advance to debt term sheets towards the back-end of this year.
"In parallel to completing debt financing, we will be working with M+W Group to finalise the detailed engineering design, complete permitting for both sites and secure off-take arrangements for the HPA plant’s production – all of which will be requirements for debt draw-down.
"We expect that the results of all these corresponding developments to come together in Q-4 this year."
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