Altech to bank $8 million from sale of German subsidiary stake

Altech Chemicals has agreed to sell a 25 per cent stake in its German subsidiary, Altech Industries Germany, for €5 million – or about A$8.3 million. Frankfurt Stock Exchange-listed Altech Advanced Materials will buy the AIG interest, delivering the ASX-listed parent company a useful cash harvest that will help advance its Malaysian high purity alumina play.

Under the terms of the transaction, Altech is set to receive an immediate cash payment of €250,000 once the final agreement has been signed by both parties. AMM is then required to make three annual instalments of €1.58 million on the anniversary of the initial cash payment across the next three years with interest to be paid quarterly. It can pay the outstanding deferred consideration in full at any time without penalty.

AIG will now have a German shareholder (AAM), which will better position it to apply for various European Union and German manufacturing incentives – as Europe brings its supply chains closer to home to increase critical raw materials self-reliance, such as materials that are used in the manufacture of lithium-ion batteries.

For Altech, an AIG that is co-funded and will be championed in Germany and Europe by an extremely supportive German shareholder (in AAM) was an opportunity not to be missed.

Altech says that while it remains focused on wrapping up project financing for the company’s proposed Johor Bahru high purity alumina, or “HPA” plant in Malaysia, the strategic sale of the 25 per cent interest in AIG to AAM will assist in the future funding of AIG and the due diligence and feasibility studies that have been initiated for a possible second HPA plant development in Germany.

Perth-based Altech has built strong ties in Germany and has German connections on its board and share register and a relationship with leading engineering firm, the SMS group.

The German Government-owned KfW IPEX-Bank has provided a US$190 million debt facility as senior lender for the proposed US$280 million HPA plant at Johor Bahru. Most of the project financing is guaranteed by the Government under its scheme that rewards project developers that use German arms and legs to build its operations.

Altech has not announced the interest rate for the majority of its debt facility, but with the German Government standing behind the loan, it will most likely make a residential mortgage holder blush.

Earlier this month, Altech announced the state Government of Saxony in Germany had agreed to commit approximately A$12 million by way of a grant to the company towards construction of a proposed second HPA plant in the east German state should the new project be deemed commercially viable.

AIG also recently signing an option agreement to purchase about 10 hectares of industrial land in the Schwarze Pumpe Industrial Park in the Spreetal municipality of Saxony, giving it a potential location for a HPA plant.

HPA is something of a futuristic mineral product that is used in everything from LED light globes to smartphone faces to electric vehicle batteries.

In its recent funding commitment letter to Altech, the Saxony Government said: “From an industrial policy point of view, Altech’s project is very much welcomed in the region. Against the background of the developing electro mobility (sector) and the companies already established in this industry segment of electric vehicle construction and battery production in this region, synergy effects are expected. Saxony has industrial experience in battery production … and has advantageous prerequisites as an industrial and research location.”

Altech’s Johor Bahru processing plant currently has a proposed design throughput capacity of 4,500 tonnes per annum of HPA.

The company is looking to get it built in the next two to three years and is targeting the first shipment of product out to customers by about 2023.

Altech will retain 75 per cent of AIG once the sale of the 25 per cent interest in its subsidiary to AMM goes through.

Is your ASX listed company doing something interesting? Contact: matt.birney@wanews.com.au