SINGAPORE: Water treatment firm Hyflux said on Friday (Jul 6) that it has reached an agreement with Maybank on the divestment process of its interest in the Tuaspring Integrated Water and Power Plant.
The agreement includes a timeline for the sale of the Tuaspring plant and other conditions that lay out the active involvement of Maybank in the divestment process.
In return, Maybank, which is the only secured creditor of Hyflux’s unit Tuaspring, will "refrain from commencing enforcement proceedings against Tuaspring or its properties and/or assets", including the integrated plant.
As such, Tuaspring withdrew its application for a debt moratorium on Jul 6, according to the filing to SGX.
TIMELINE, ACTIVE INVOLVEMENT OF MAYBANK
Seen as one of Singapore’s most successful business stories, Hyflux made the unexpected move last month to seek court protection for a reorganisation of its business and liabilities.
The household name, which first made its mark in water treatment and later ventured into power generation, cited “prolonged weakness” in the local power market for the turnabout in fortunes.
On Jun 19, Hyflux and four of its subsidiaries – Hydrochem, Hyflux Engineering, Hyflux Membrane Manufacturing and Hyflux Innovation Centre – were granted an additional six-month reprieve from creditors by the High Court.
Tuaspring was excluded as it obtained leave to discontinue its application and pursued a separate one under Section 210(10) of the Companies Act.
This application for a debt moratorium was originally scheduled to be heard at the Supreme Court on Friday at 2.30pm, but was cancelled.
In the Friday announcement, Hyflux said Maybank had provided Tuaspring with banking facilities that are secured by various collaterals and securities over the unit’s properties and assets, including the Tuaspring plant.
Moving forward, the embattled water treatment firm said it will continue to seek potential investors with a view to divesting its interest in the Tuaspring project, which cost more than S$1 billion to build and marked Hyflux’s misstep into the electricity market.
To do so, it is to “execute a binding agreement with a successful bidder or investor by Oct 15, 2018, obtain approval for the transaction from Maybank, the Public Utilities Board and/or the Singapore High Court (if necessary) by Dec 11, 2018, and obtain the approval of the shareholders by Feb 4, 2019”.
The statement added that Maybank will be “actively involved and engaged” in the divestment process.
In particular, a valuer will be appointed by Maybank to conduct a valuation exercise of the Tuaspring plant.
Tuaspring will also appoint a monitoring accountant and special accountant to monitor its cash flow and to review the divestment process, respectively. The reports are to be shared with Maybank, the statement said.
The Tuaspring plant is the single largest asset on the balance sheet of Hyflux Group. Losses over the years have made it the “noose” around the company’s neck, according to analysts who have said that a divestment of the plant will help to solve Hyflux’s cash crunch.
Last year, Tuaspring registered a net loss of S$81.9 million, dragging Hyflux down and contributing to the water treatment firm's first annual loss since listing in 2001.As of April 30, 2018, its total liabilities amounted to S$537 million.
Since putting it up for sale in early-2017, the company has insisted on getting no less than book value for the plant. A Jun 14 affidavit by Hyflux founder-CEO Olivia Lum said the company is in discussions with four parties on a possible sale of the integrated plant.
Reiterating its intention to divest its interests in Tuaspring, Hyflux’s statement said this will be done at the “best possible value in order to facilitate the Hyflux Group’s wider reorganisation process, and maximise value for all stakeholders, including holders of its preference shares and perpetual securities”.