SINGAPORE: SM Investments (SMI) said on Thursday (Mar 28) that it has been reviewing the sums that should be set aside for Hyflux’s working capital needs and to settle creditors’ claims, in light of “new material information” on the embattled water treatment firm.
The Indonesian consortium did not specify what the new information is, but said that it “significantly increases” the working capital requirements of Hyflux group.
"In light of the new material information disclosed to SMI, it has been reviewing the allocation of the investment for the working capital requirements of the Hyflux group.
"This will in turn affect the amount available for settlement to creditors," it said.
“Had this material information been disclosed earlier, it would have been taken into consideration in the allocation previously discussed with creditor groups.”
The update from SMI comes on the back of Hyflux’s filing on Tuesday night, which laid bare several disagreements between both parties.
One of them concerned the use of an aggregate cash amount of S$272 million – S$271 million from SMI and S$1 million from Hyflux’s existing funds – to settle Hyflux’s creditor claims. Under the existing restructuring proposal, S$129 million was to be set aside for working capital.
Hyflux, in its Tuesday filing to the local bourse, said it had established an agreement with SMI on the overall cash and equity allocation before the release of its restructuring plan on Feb 16.
However, SMI refuted that on Thursday, stating that “the allocation set out in the schemes of arrangement proposed by Hyflux is not agreed”.
The schemes, therefore, do not satisfy the conditions of the restructuring agreement, SMI added.
Other disputes between Hyflux and its Indonesian white knight revolved around the state of affairs surrounding the water treatment firm's Tuaspring plant in Singapore and the Magtaa desalination plant in Algeria.
The first referred to the default notice from Singapore’s national water agency PUB, while the second involved another notice served upon Hyflux by buyers who have indicated their right to cancel a water purchase agreement due to defaults at the plant.
For both, SMI had described the defaults as “prescribed occurrence” that gave it the right to terminate its restructuring deal with Hyflux. It also gave the Hyflux two weeks to remedy both defaults in separate notices issued earlier this month.
In its Thursday statement, the Indonesian consortium said it was made aware of the termination notice regarding the Magtaa desalination plant in Algeria only on Mar 19, nearly three months after Hyflux received the notice on Dec 25.
SMI also stated that it has taken note of separate arbitration proceedings against Hyflux concerning the company’s Souk Tleta desalination plant in Algeria.
Channel NewsAsia has reached out to Hyflux for comment.
This marks the latest exchange in an increasingly uncertain relationship between Hyflux and its investor.
Hyflux has said that the vote on its restructuring plan will proceed as planned on Apr 5, but some observers reckon that recent developments suggest an increasing likelihood that SMI will pull the plug.
Should SMI "wrongfully" terminates the deal, Hyflux said it reserves the right to lay claim to a S$38.9 million deposit, which had been placed into escrow shortly after the execution of the restructuring agreement.
This, according to National University of Singapore’s (NUS) Associate Professor Lawrence Loh, shows that the company has considered the worst case scenario of an SMI pull-out “which could potentially even be within days from now”.