Altech Chemicals Ltd (ASX:ATC) has received a Speculative Buy from Perth-based stockbroking firm DJ Carmichael.
The broker applied a valuation of $0.355 from $0.41 per share. The following is an extract from the report.
ECA financing steps in final throws
ATC are making good progress on their project funding application to the Federal Republic of Germany’s Export Credit Agency (ECA).
ATC are now at stage 7 of a 9 stage process that, if successful, will result in the majority of the project debt being provided at an extremely low interest rate.
In addition, ATC is seeking to increase the percentage of total project debt to be covered under export credit, thereby decreasing the repayments and increasing yearly project cash flows.
The recent successful $10m capital raise should see ATC funded through to first drawdown of the project funding Q1 CY17.
- ATC enter the final stages of German project financing: ATC received positive preassessment from the German Government in early August and has rapidly progressed into the last three stages of the ECA finance application. We expect to see initial responses from the ECA cover application in Q4 should ATC be successful, with first drawdown on project financing during Q1CY17.
- Increase in percentage cover sought: ATC, via its ECP contractor, M+W Group, is seeking additional ECA cover due to the high amount of German and European equipment supplied to the project. If successful, this will see financing under the ECA arrangement increase from US$40m to US$60m and a decrease in the amount required from a senior debt facility from US$20m to US$10m.
- Site visits and DD consultants appointed: ATC and KfW IPEX-Bank have already appointed due diligence consultants to the project who will make their report on the legal, technical and market aspects of the project available to the German Government for final approval. Once submitted the German Government make a decision and preliminary approval of ECA cover is communicated to ATC. This is legally binding subject to conditions precedent such as all permits being in place and equity financing complete.
- Recommendation and Valuation: We maintain our Speculative Buy recommendation but decrease our valuation by 13% to take into account additional shares on issue after adjusting for increased cash. This moves our risked valuation to $0.355 from $0.41 per share.
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