HPA is a high-value, high margin product used in the manufacture of products such as substrates for LED lights and a range of other high growth industries.
The financing consists of a US$170 million debt package negotiated with the German export credit agency (ECA), with the balance of US$20 million at normal commercial terms.
The ECA covered loan (US$170 million) is for an extended period with highly attractive terms, providing Altech with ample time to build the plant and bring it into production.
Increased clarity surrounding funding has generated interest in the HPA project.
Remaining funding covers two-year construction period
The balance of US$20 million of borrowing will be a 7-year loan including a 2-year construction period, resulting in a 5-year repayment period and at customary lending terms.
Iggy Tan, managing director, said: “By comparison to typical project finance, the project finance agreed with KfW IPEX-Bank is extremely attractive.
The final step to finance close is the execution of the facility agreement documentation and the satisfaction of various conditions precedent required before first debt draw-down.”
Altech considers final funding options
Altech’s objective is to achieve a robust project funding solution that maximises shareholder returns and minimises dilution
The company has commenced the project equity funding process, which is a condition precedent to debt draw-down.
The required equity component of project funding will be determined as management works though the balance of funding options and financing costs.
The final funding mix may include subordinated mezzanine finance and/or project level equity participation.
A joint venture could be considered
Since the KfW IPEX-Bank debt funding was confirmed in late 2017, there has been heightened interest in Altech and its HPA project.
This has resulted in a number of project funding options being presented.
Altech is also exploring potential project-level joint venture options with several major industrial groups.
This could result in a major reduction of the equity funding required to fund the project and subordinated mezzanine finance with associated equity.