Altech Chemicals Ltd signs mandate with German KfW Ipex-Bank for project financing

Altech Chemicals Limited is pleased to advise that it has executed an exclusive mandate with German KfW IPEX-Bank GmbH, a wholly-owned subsidiary of the promotional bank KfW, to provide advisory and structuring services in relation to the provision of senior debt project financing for the Company's proposed high purity alumina (HPA) project. Execution of the mandate comes after an initial evaluation of the project by KfW IPEX-Bank following its recent submission to the Company of a Letter of Interest (LOI) for project financing.

Highlights:

- Exclusive project finance mandate executed with German KfW IPEX-Bank
- Mandate for senior debt, including German Export Credit Agency (ECA) insured debt
- Approximately US$40 million of project debt estimated to qualify for ECA cover

KfW IPEX-Bank is a leading German export and project finance specialist with significant experience in the debt financing of mining and chemical projects worldwide, including projects in the Asia-Pacific region and projects similar to Altech's proposed HPA project. The mandate contemplates senior debt project financing that will maximise the use of Export Credit Agency (ECA) insurance cover under the German government backed project finance export guarantees.

ECA cover is an instrument for the promotion of German exports. It provides a cover to bank lenders to insure against the risk of an export loan and is administered by Euler Hermes, the German Export Credit Agency. The interest rate charged by lenders on the portion of total project debt that qualifies for ECA cover is available under attractive conditions with long tenor in accordance with OECD guidelines. Interest charged on any senior debt and/or mezzanine debt over and above the ECA cover portion of debt is normally at standard commercial rates. The initial Company estimate is that approximately US$40.0 million of project debt should qualify for ECA cover.

ECA cover was identified as applicable to Company's HPA project because the majority of the plant and equipment will be sourced from German and other European Union manufacturers. Furthermore, German company M+W Group is the appointed engineering, procurement and construction (EPC) contractor for the project.

The first step in the ECA cover approvals process is for the Company, KfW IPEX-Bank and M+W Group to make a presentation to Euler Hermes for its assessment of the project, from which an initial determination of eligibility for ECA funding will be made. ECA cover and subsequent senior debt project financing is subject to a detailed due diligence process and there is no guarantee that ECA eligibility or final funding will eventuate, however, the execution of this mandate with KfW IPEX-Bank is an important step in support of the project.

Commenting on the execution of the senior debt financing mandate with German state-owned KfW IPEX-Bank, Altech's managing director Mr Iggy Tan said "The execution of this mandate with KfW IPEX-BANK for senior project debt financing, including its support in pursuing German Export Credit Agency (ECA) cover, is a significant step in the Company's project financing efforts. The possibility of accessing low interest rate, long term project financing that may be available under German ECA cover is compelling and the detailed due diligence process associated with final grant of the cover will be a strong endorsement of the Company's HPA project."