Altech Chemicals Ltd (ASX:ATC) has completed its acquisition of a 29% stake in Youbisheng Green Paper AG which will be renamed Altech Advanced Materials AG (AAM).
The company has also completed the sale of a right to AAM for it to acquire up to 49% in Altech’s high purity alumina (HPA) project for US$100 million.
Consideration for the sale comprising a non-refundable fee of €500,000 from AAM has been received by Altech, which itself issued €1 million fully paid Altech shares and paid €500,000 in cash to Deutsche Balaton AG, the previous holder of the 29% AAM interest.
Altech strategy does not preclude other JV initiatives
Altech managing director Iggy Tan said the company was excited with the prospect of working with AAM on its European marketing campaign and implementing its German project equity strategy.
Tan added: “Altech’s German equity strategy does not preclude the other joint venture partner initiatives that are also underway, nor does it replace the mezzanine debt initiative that is progressing with Macquarie Bank.”
AAM share price surges
AAM shareholders approved in July the issue of up to 63,102,080 new shares, which would raise €69.4 million when fully subscribed and at the minimum subscription price of €1.10 per share.
Drafting of the required prospectus has begun and is expected to be lodged with the German regulator next week.
Since receiving shareholder approval for the share issue, AAM shares have surged in price from €1.30 a share in mid-June to a high of €4.50 a share on July 20.
Altech views the price hike a positive response to an opportunity to invest in Altech’s HPA project with a guaranteed year-six buy-back and agreed rate of return.
Existing shareholders offered shares at 1:40 ratio
The new shares will follow a structured process where existing shareholders will first be offered new shares for subscription at a ratio of 1 existing share to 40 new shares priced at €1.10 each.
Any new shares not subscribed by the end of the initial subscription period, or oversubscription shares, may be subscribed by existing shareholders that have exhausted their 1:40 new share subscription rights at an issue price of at least €1.10 a share.
Remaining unsubscribed new shares can then be placed at least at €1.10 but aiming for a price of €1.20 a share or higher to non-AAM shareholders.
Alignment of corporate branding
The share issue will be marketed at an initial round of roadshows in Germany during September, including attendance at investor conferences such as Herbstkonferenz (Frankfurt), Zurich Capital Markets Conference (Zurich), Edelmetallmesse (Munich) and the German Equity Forum (Frankfurt).
AAM is aligning its corporate branding with that of Altech in anticipation of its status as HPA project joint venture partner.
The brand changes will include AAM’s corporate logo and website which are close to being launched.
Considerably lower production costs than established HPA producers
Altech is finalising project financing and has executed an agreement with its appointed engineering, procurement and construction contractor SMS Group to begin construction of the HPA plant at Johor, Malaysia.
The final investment decision study completed by Altech detailed the construction and operation of a 4,500 tonnes per annum HPA plant that will produce alumina directly from kaolin clay.
Kaolin will be sourced from the company’s 100%-owned deposit at Meckering in Western Australia.
Altech’s production process will employ conventional “off-the-shelf” plant and equipment to extract HPA using a hydrochloric acid-based process.
Production costs are anticipated to be considerably lower than established HPA producers.