Hyflux gets third deadline extension for sale of Tuaspring plant

Creditor Maybank has agreed to push the deadline back for the third time to December 28, Hyflux said in a regulatory filing on the Singapore Exchange.

Tuaspring Integrated Water and Power Plant
Source: Hyflux

Water treatment firm Hyflux Ltd has received an extension on the deadline to find a buyer for its Tuaspring water and power plant from its creditor Maybank.

Maybank (Malayan Banking), has agreed to push the deadline back for the third time to December 28, Hyflux said in a regulatory filing on the Singapore Exchange (SGX) on Tuesday. The deadline was initially set on October 15 but was subsequently extended to November 29.

According to a deal with Maybank in July, Hyflux has to find a successful bidder or investor for Tuaspring. Back then, Maybank had agreed to put off enforcement proceedings against the desalination and power plant, its properties, and assets.

Hyflux noted in Tuesday’s statement saying Maybank has the right to terminate the collaboration agreement if the new deadline is breached.

Billion dollar Tuaspring and its losses

Tuaspring is a S$1 billion-dollar landmark project of Hyflux and an iconic symbol to display on the firm’s prowess. It marked the water treatment firm’s foray into the energy business in 2011.

It is the largest desalination plant in Singapore and supplies 70 million gallons of desalinated water daily under a 25-year service agreement with Singapore’s national water agency PUB which expires in 2038. It is also the first water plan in Asia to be integrated with a power generator.

The plant’s earlier plans to produce electricity for the plant and sell excess electricity to the national grid were met with problems as the local power market was facing an oversupply which weighed down on electricity prices. Tuaspring’s revenue was unable to cover its operating costs and financing costs and the losses have been topped up by Hyflux Group’s cash.

The plant registered a net loss of S$81.9 million for the full year ended December 31, 2017 and has been contributing to the group’s losses since 2001. As of April 30, 2018, the plant’s total liabilities snowballed to S$537 million.

Tuaspring Integrated Water and Power Plant
Source: Hyflux

White knights extend S$560 million lifeline after Hyflux’s fall from grace

In October, Hyflux received a S$400 million equity investment from SM Investments in exchange for a 60% stake in the water treatment company to help finance its restructuring and debt problems. SM Investments is a consortium between Salim Group and Medco Group. The deal also includes two separate loans: a shareholder’s loan of S$130 million and a debtor-in-possession loan of S$30 million.

But stakeholders with Hyflux have to agree to the scheme of arrangement for the deal with SM Investments, and that includes national agencies such as PUB and the National Environment Agency.

It is said that the voluntary sale of Tuaspring will no longer be actively pursued due to the recent S$400 million equity injection offer from the investors, and Hyflux is working with the consortium to talk to Maybank about the sale of Tuaspring.

Last month, the water treatment company sold its 50% stake in an Indonesian firm for a sum of S$32 million for more capital injection. A portion of the sale proceeds will be used for working capital purposes.

Hyflux’s shares remain suspended on the SGX.

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