Altech Chemicals Ltd (ASX:ATC) is advancing a proposed US$90 million mezzanine loan facility following a recent meeting in London with its preferred mezzanine lender Macquarie Group Ltd (ASX:MQG) (OTCMKTS:MQBKY).
The bank reaffirmed its continued interest in providing the facility to Altech, especially given the increased profile of planned lithium-ion battery plant construction in Europe, and a stated industry preference for securing long-term battery materials supply.
This meeting and other recent developments in Europe indicate a positive response from the burgeoning European lithium-ion battery sector to Altech's high purity alumina (HPA) project, including a plant being constructed in Malaysia.
Finalising a facility
The proposed mezzanine loan remains subject to Macquarie satisfying due diligence, various internal approvals and inter-creditor arrangements with senior lender KfW IPEX-Bank in Germany.
Macquarie has progressed discussions with the bank and its legal counsel (Freshfields Bruckhaus Deringer), regarding access to the previous legal due diligence work and updates to this work.
Fixed price offtake
While Altech has a 10-year offtake sales arrangement with Mitsubishi Corp’s (TYO:8058) Australian subsidiary, Mitsubishi Australia Ltd, Macquarie highlighted the importance of it selling a proportion of the planned HPA production to an end-user at fixed product prices to demonstrate some pricing transparency in an otherwise opaque market.
The company’s objective is to link with one or more HPA end-users that appreciate the advantage of a current commitment to accept future volumes of its 99.99% (or 4N) HPA product at pre-agreed or other transparent pricing, and/or to directly partner with Altech for the development of its HPA project.
The recent posting of Altech alternate director Uwe Ahrens to Germany is already starting to deliver increased engagement with emerging participants in the growing European lithium-ion battery sector.
The European-based initiatives will support the company’s objective of closing the balance of finance for its Malaysian HPA project, with Frankfurt Stock Exchange-listed Altech Advanced Materials AG (AAM) at the helm of this work.