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Altech Chemicals receives US$120 million debt term sheet

The proposed HPA plant in Malaysia will be fed by the company's kaolin mine.
highway sign reading 'funding, next exit'
The company is expecting more similar term sheets from potential lenders

Altech Chemicals Ltd (ASX:ATC) (FRA:A3Y) has received a debt term sheet for up to US$120 million for its proposed high purity alumina (HPA) plant in Malaysia.

The indicative mezzanine debt sheet was received from an international investment bank and is in addition to the US$190 million senior debt package with KfW IPEX-Bank.

READ: Altech Chemicals finalises US$190 million finance package for alumina plant

Altech has been working with a number of advisors to secure the balance of funds for the proposed HPA plant and associated kaolin mine.

One of the options being pursued was a mezzanine debt facility of up to US$120 million.

Mezzanine debt option a good result for shareholders

Altech’s managing director Iggy Tan said: “From the outset the company has been targeting ‘vanilla’ mezzanine debt from top-tier lenders.

This approach does take longer and involves a higher level of scrutiny (due diligence), however securing mezzanine debt from top-tier providers will be a far better outcome for the company and shareholders.

“We are now starting to see some reward from this strategy and our efforts.”

READ: Altech Chemicals has key catalyst on the horizon as it trades at steep discount to broker valuations

A key condition to be satisfied before drawing down on the US$190 million from German government-owned KfW IPEX-Bank is securing a balance of funds for the associated kaolin mine in Western Australia that will feed the HPA plant.

The company has been considering a number of options including mezzanine debt, taking on a partner, an equity raising and a royalty sale.

Altech expects more similar term sheets

The received US$120 million indicative mezzanine debt term sheet represents a facility amount of US$90 million plus accrued interest during construction and plant commissioning.

The term sheet was from an investment bank with a global presence and more than US$300 billion in assets under management.

Altech expects similar term sheets from other potential lenders currently in due diligence and evaluation during the course of the month.

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