Altech Advanced Materials AG: LISTED GREEN BOND PREPARATIONS PROGRESSING WELL

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Frankfurt am Main (pta020/10.02.2021/12:50 UTC+1) Highlights:

- Listed green bond targeting an offer of ~USD 144m
- Another alternative for a second layer of project financing
- Preparation progressing well and on track
- HPA project 49% less carbon footprint than conventional HPA

Altech Advanced Materials AG ("AAM") (FRA: AMA1) is pleased to announce that the preparations of Altech Chemicals Limited ("Altech") for its proposed listed green bond offering of ~US-Dollar 144 million, to provide additional financing for its Malaysian high purity alumina (HPA) project (see our corporate news 30 October 2020) are on track and progressing well.

Altech is working closely with London based structuring agent, Bedford Row Capital (Bedford Row) and Bluemount Capital (WA) Pty Ltd (Bluemount) to prepare for a Bond offering. Preparations for the bond offering commenced in December 2020 and have now progressed to a point where due diligence is complete - including an environmental social governance (ESG) audit; a draft facility agreement is distributed; and a preliminary offering document is being reviewed. Altech is aiming to raise USD 144m from the proposed bond issue, of which USD 100m will be used as secondary debt for its Johor HPA plant (with USD 44m to service bond interest during the HPA plant construction phase). Senior project finance of USD 190m has already been secured from German government owned KfW IPEX-Bank.

The bond issue process consists of the initial preparation phase (currently underway), where legal documentation, structures, teasers, draft investment memorandum, and comprehensive corporate presentation packs are developed and then distributed to prospective subscribers. This is followed by the opening of a data room for a bookbuild phase, which will only initiate upon positive "soft soundings" during the preparation phase and will optimally be conducted in a period of positive overall market sentiment.

The final phase of the bond issue is execution, when commitments are settled, and bond proceeds formally deposited with the SPV Co. (closing). Application for listing the bonds on the Frankfurt Stock Exchange would be made following the closing. Meanwhile, preparation work is progressing well and on schedule.

Background

Increasing green bonds are being used to finance new and existing projects which deliver environmental benefits and a more sustainable economy. As announced on 20 May 2020, Altech's HPA project has been formally assessed as "green" by the independent Centre of International Climate and Environmental Research (CICERO) based in Oslo, Norway. Compared to conventional HPA processing, Altech's disruptive HPA production technology is estimated to deliver a ~49% reduction in the comparable carbon footprint, and use ~41% less energy. Also, the primary end-use for Altech's HPA is targeted for climate change products, such as LEDs lights and lithium-ion batteries.

Despite the negative impact that the COVID-19 pandemic has had on global markets since March 2020, AAM has continued to focus on bringing about the close of project financing for Altech Australia's Malaysian HPA project, whilst ensuring that stage 2 early works construction activities were completed at the HPA plant site. In addition to the USD 190 million senior project finance loan facility available from German government owned KfW IPEX-Bank, Altech and AAM together continue to pursue multiple additional subordinated debt funding options. The use of bonds to secure a secondary level of project finance debt could be an alternative to bank mezzanine debt.

An advantage of bonds over bank finance is that only the interest (coupon) is paid to bond holders during the term, whereas mezzanine bank debt requires the payment both principal and interest over the loan term. Bonds are typically re-financed at the end of the term, and in the case of start-up projects such as Altech Australia's HPA project, the coupon (interest rate) payable on re-finance would expect to be lower because project construction and commissioning risk is removed, and an operating track-record for the project would be in place.

Work on satisfying the outstanding requirements of the previously announced USD 90 million mezzanine loan facility with preferred mezzanine lender Macquarie Bank (Macquarie) remain on-going. Technical and market due diligence is complete, however Macquarie has requested that Altech secure pre-sales of a proportion of its planned future HPA production to an end user at fixed product prices, to demonstrate some pricing transparency in an otherwise opaque market. AAM continues to engage with a number of European electric vehicle (EV) sector participants that are potential product end users interested in securing future HPA supply.

The Management Board

About Altech Advanced Materials AG

Altech Advanced Materials AG ("AAM") currently plans to acquire up to 49% of Altech Chemicals Limited ("Altech Australia"), a subsidiary of Altech Chemicals, for up to USD 100 million.

Altech Australia is currently building a production plant for high-purity alumina (99.99%; 4N HPA) for 4,500 tons p.a. in Malaysia and also has its own deposit for the extraction of the main raw material kaolin. 4N HPA is required for the production of LED lights and as a separator for lithium-ion batteries, which are needed for electric vehicles and smartphones, for example. According to market studies, demand for 4N HPA is expected to grow by an average of 30% p.a. until 2028. Altech Australia's proprietary process allows the production of HPA as a cost leader, as HPA can be extracted directly from kaolin. This allows a production without the use of energy-intensive aluminum. The acceptance of the production volume for the first 10 years has been secured by an off-take agreement with Mitsubishi Australia and the production capacity and quality is guaranteed by the German plant engineering company SMS group GmbH from Düsseldorf, which has also agreed to provide equity capital for the Altech HPA project.

The overall project has a remaining investment volume of around USD 390 million, of which KfW-IPEX Bank has already committed USD 190 million under certain conditions and SMS group GmbH has already entered into an equity commitment of USD 10 million. Altech Chemicals Limited is currently in discussions with mezzanine providers regarding the provision of USD 90 million mezzanine capital. The remaining USD 100 million is to be provided by AAM.

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Emitter:	Altech Advanced Materials AG Ziegelhäuser Landstraße 3 69120 Heidelberg Germany
Contact Person:	Hansjörg Plaggemars
Phone:	+49 6221 64924-0
E-Mail:	info@altechadvancedmaterials.com
Website:	www.altechadvancedmaterials.com
ISIN(s):	DE000A2LQUJ6 (Share)
Stock Exchange(s):	Regulated Market in Frankfurt; Free Market in Berlin, Dusseldorf