Altech Ltd (ASX:ATC) continues to advance through the final stages of securing project finance for its proposed high purity alumina (HPA) plant in Malaysia.
Last month, the company executed a commitment letter together with agreed terms and conditions formalising the US$190 million senior debt package with Germany-based KfW IPEX-Bank.
Altech must satisfy various conditions before drawing down the funding, which includes securing a balance of funds for the associated kaolin mine in Western Australia that will feed the HPA plant.
The company is considering a number of options including mezzanine debt, taking on a partner, an equity raising and a royalty sale.
Iggy Tan, managing director, said: “We currently estimate that it may take until mid-2018 to determine the optimal funding solution for our HPA project.
“The company’s objective remains to achieve a robust project funding solution that maximises shareholder returns and minimises dilution.”
Mezzanine debt option well advanced
Altech has been identifying potential financiers and securing indicative terms for proposed mezzanine debt.
The company is targeting mezzanine debt of between US$70 and US$120 million, which modelling demonstrates the project can support, due to its highly cash positive forecasts.
To date there has been strong interest and already numerous financiers have commenced accessing the company’s data room.
Joint venturing with an industrial group
Altech is also exploring the option of a project level joint venture investment with several industrial groups.
This option would likely to result in a major reduction in the amount of equity contribution required from Altech shareholders as part of the balance of funds.
A partial sale at the project level in conjunction with mezzanine debt is an attractive option to secure the majority of the balance of funds, as it will significantly reduce shareholder dilution.