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Corporate Spotlight

Altech Chemicals Limited (Altech/the Company) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA) (Al2O3).
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Interview with Uwe Ahrens, Executive Director

EQUITY STRATEGY

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ALL CONDITIONS PRECEDENT SATISFIED FOR GERMAN PROJECT EQUITY STRATEGY

ASX Announcement 14 August 2019 


Highlights 

  • All conditions precedent satisfied for German project equity strategy transactions 
  • Altech will now proceed to transaction completion 
  • Altech nominees already appointed to German management and supervisory boards 
  • German entity to be re-named Altech Advanced Materials AG


Altech Chemicals Limited (Altech/the Company) (ASX: ATC) (FRA: A3Y) is pleased to advise that all of the conditions precedent have now been satisfied for both transactions outlined in its German project equity strategy announced on 18 July 2019. The strategy involves the acquisition of 29% of the shares of Frankfurt stock exchange listed Youbisheng Green Paper AG (to be re-named Altech Advanced Materials AG (AAM)); and the sale by Altech of a right to AAM to acquire 49% of Altech’s high purity alumina (HPA) project for US$100m. With the satisfaction of all conditions precedent, Altech will now proceed to completion for both transactions.


To complete its acquisition of 29% of the shares of AAM, Altech will make a cash payment of €500,000 and issue €1,000,000 of Altech fully paid ordinary shares to the vendor (Deutsche Balaton AG); a balance of €1,229,000 cash consideration is due on 1 March 2020. To complete Altech’s sale of the right to AAM, for AAM to acquire up to a 49% interest in the Company’s HPA project, AAM will make a non-refundable cash payment of €500,000 to Altech. 


The satisfaction of all conditions precedent has resulted in: 

  • 1. The appointment of Altech’s managing director Mr Iggy Tan and alternate non-executive director Mr Uwe Ahrens to the management board of AAM; 
  • 2. The appointment to the supervisory board of AAM, Altech’s nominee Mr Dieter Rosenthal, with 2 additional Altech nominees to be appointed to the 5 member board in due course; 
  • 3. shareholders approving the change of company name to Altech Advanced Materials AG; 
  • 4. shareholders approving a capital increase of up to €63,102,080; and 
  • 5. Altech’s satisfaction with all of its due diligence inquiries of AAM


Altech managing director Iggy Tan said “it is pleasing to have documented both transactions of our German equity strategy in a very short time-frame, and to have satisfied all of the conditions precedent items within four weeks of signing the agreements.


The next step following transaction completion is for AAM to appointment a German bank and brokers to manage a Europe marketing campaign for its pre-approved capital raise. We understand that there has already been interest in the proposed raise from potential European investors, attracted by the guaranteed year-6 buy-back and agreed return.


Altech’s German equity strategy does not stop any of the other joint venture partner initiatives that are also underway, nor does it replace the mezzanine debt work that is progressing with Macquarie Bank.”


Click here to view the full announcement

LATEST PRESENTATION

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EUROPEAN CAPITAL MARKETS

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Altech launches equity strategy to access European capital markets


  • Altech Chemicals has executed an agreement to acquire 29 % of German company, Youbisheng Green Paper AG (YAG), to secure the access the European Capital markets;
  • The deal gives YAG the non-exclusive right to acquire up to 49 % of Altech's HPA project for US$100 million;
  • Altech will gain increased exposure to European investors and become a key supplier for the electric vehicle and battery markets;

Altech Chemicals has launched a European equity strategy which will allow its investors to acquire a 49 % direct interest in the company's high-purity alumina (HPA) project.


The deal involves Altech executing a subscription, sell-back and sell-back put option deed with YAG which gives YAG the non-exclusive right to acquire up to a 49 % interest in Altech's HPA project for US$100 million. 


This deal is expected to significantly increase the company's exposure to European investors and to be a key supplier in the growing European electric vehicle (EV) and battery market with 4N HPA (99.99 % purity).


The project has attracted significant interest in European countries such as Germany due to extensive support from German government-owned financial institutions, the awarded contract for constructing the HPA plant and the company's prominent German shareholder base. As of today, Altech secured US$190m of senior debt from KfW IPEX for its project development.


The acquisition of YAG is subject to the satisfaction of various conditions, one of which includes YAG's name being changed to Altech Advanced Materials AG.


The company was reportedly approached unsolicitedly regarding the deal. Following meetings with German advisors, potential investors and various others, Altech has decided to pursue the opportunity.

Altech's proposed investment in YAG and the sale to YAG of the right to acquire up to 49 % of its HPA project is an important first step for the company's long-term strategy.


Europe is at the forefront of the EV and battery market, in particular, Germany and France are emerging as leaders in creation of the major battery industry in Europe. In addition, the 2020 EU CO2 new emission standards are driving the strategic shift in the replacing the internal combustion engines with electric vehicles. 


European automotive manufactures have identified the risks along the EV supply chain and outlined the need for the coordinated strategy to secure supply of the key components, production facilities and raw materials domestically.


Altech will facilitate this by purchasing a 29 % interest in Youbisheng Green Paper AG (YAG), a German company listed on the Frankfurt Stock Exchange. This will cost Altech €2,729,000.

CRU BACKS ALTECH

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CRU supports Altech's high-purity alumina in its latest report


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  • CRU Group, the world’s leading metals and mining marketing consulting firm, released highly encouraging forecast on the global market of High Purity Alumina (HPA), a key component for the production of lithium batteries;
  • The report estimated that demand on 4N+ HPA (99.99%) products could grow at 30% per year from 19,000 tpa in 2018 to 272,000 tpa by 2028 
  • CRU expects a structural deficit of HPA products and price spikes in the next decade;


CRU Group, the world’s leading metals and mining marketing consulting firm, has released a highly encouraging market outlook on global High Purity Alumina (HPA) products. 


The strong demand for 4N+ HPA (99.99% and greater) is stronger than what CRU had initially forecast in its previous market report from 2018.


This report from 2018 estimated 4N+ HPA demand would reach 92,900 tonnes by 2025 and in the most recent report CRU estimated that 4N+ HPA could, in theory, grow 30 % per year up to 272,000 tonnes in 2028. However, this growth would be constrained by the limited supply availability, and as a result, the prices are expected to increase rapidly.


CRU has also estimated that the market for HPA in powder form used in lithium-ion battery separators could reach 187,000 tonnes per year by 2028 - only if sufficient supply was available.


The demand on HPA products started growing rapidly with the lithium batteries dominating the market. One of the issues however is that lithium batteries often generate a lot of heat if left unmanaged, that can result in overheated phones that could maybe blow up. It has been found that using HPA coated separators in the batteries can boost safety and efficiency.


The coated separators increase the batteries thermal stability and enhances the impedance which allows for a higher power capability. In its report, CRU confirms the main driving force for HPA market and, subsequently, ceramic coated separators in lithium-ion batteries is the rising market for electric vehicles.


Last year more than two million electric vehicles were sold worldwide, and this number is expected to increase to 2.8 million this year. The positive impact on the environment and decreasing operating costs is what is making these vehicles so popular.


It also reported on historically major suppliers from Japan, France, Germany and the United States. Recent production from China has increased significantly but the quality of the alumina often falls below on what makes it high purity.


Revised price forecast form CRU adopted by Altech, resulted in the NPV, increased by 32% and reaching US$669m and subsequent improvement of revenue and EBITDA.

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