Altech Chemicals Ltd (ASX:ATC) (FRA:A3Y) has received commitments from institutional and professional investors for a share placement of around $17 million.
Funds will be used to finalise engineering and commence construction of a high purity alumina (HPA) plant in Johor, Malaysia, as well as the close of project finance.
The first stage of construction at the HPA site is expected to begin during the current quarter and will cost around $10 million.
Share purchase plan
Placement shares will be issued at a price of 16.5 cents per share, a 13.2% discount to the price trading at close of trade on Wednesday, July 4.
Altech is also offering a share purchase plan to existing shareholders, who will be able to purchase up to $15,000 of new shares at the same price paid by the placement participants.
The share purchase plan is expected to raise up to $3 million.
Altech managing director Iggy Tan said the company was extremely pleased with the support received for the share placement.
Tan said: “The placement was well supported by existing shareholders and we are delighted to welcome a number of high-quality new investors onto the share register.”
READ: Altech Chemicals eyes growing demand for high purity alumina from lithium-ion battery sector
Most of the HPA cost will be credited against the US$280 million lump-sum fixed-price plant engineering procurement and construction contract awarded to German engineering firm SMS group GmbH.
Stage I construction will include bulk earthworks; extensive foundation piling; the construction of retaining walls; underground storm water/process discharge tanks; and construction of a maintenance workshop.
Altech is equity funding the first stage to maintain project momentum, with the works being conducted concurrently with project finance close.
Tan said: “The funds that have been raised will allow Altech to commence HPA plant construction in parallel to finalising project financing.
“The success of any project depends on maintaining development momentum and we have achieved that in the last four years.”
READ: Altech Chemicals signs US$60 million stream finance facility for alumina project
Altech announced in February it had executed final terms for a US$190 million senior debt package with German government-owned KfW IPEX-Bank.
In May the company received an indicative non-binding mezzanine debt term sheet from a global investment bank of US$90 million, and in June executed an indicative non-binding term sheet for a US$60 million stream finance facility.
Combining the stream facility with senior and mezzanine debt would provide a total project finance of US$350 million, which the company is considering.
Altech is also exploring potential project-level joint venture options with several major industrial groups that could result in a major reduction of the final equity amount required to fund the project.