SINGAPORE: Investor watchdog Securities Investors Association Singapore (SIAS) has asked PUB to clarify how a zero-dollar purchase price for the Tuaspring Desalination Plant (TSDP) was determined.
In a letter addressed to PUB chief executive Ng Joo Hee on Tuesday (Mar 26), SIAS president David Gerald posed a series of questions to the national water agency concerning its announcement that it would take over the plant.
PUB said earlier this month that it would terminate a water purchase agreement (WPA) with Hyflux subsidiary Tuaspring Pte Ltd (TPL) and start taking over its desalination plant if the company does not remedy its defaults by Apr 5.
READ: PUB ready to take over desalination plant at zero dollars if Hyflux's Tuaspring does not resolve defaults
The agency said it was willing to waive the compensation sum it is entitled to under the agreement, and purchase the desalination plant at zero dollars.
In his letter, Mr Gerald asked how the purchase price of zero dollars was determined, and if the purchase price should instead be "the equivalent replacement cost of building or an equivalent plant".
"In your media release dated Mar 21, 2019, you stated that 'the purchase price for TSDP will be determined by an independent valuer in accordance with the WPA'. Is there an independent valuation for [the] TSDP?" Mr Gerald asked.
His letter also questioned the timing of PUB's action and why the agency - given that it was already aware of Tuaspring and Hyflux's situation since 2017 - chose to issue the notice of default such that it would expire on Apr 5.
That is the same day Hyflux's restructuring plan will be put to a vote.
"Recent actions by PUB, such as the service of default notice on TPL and its recent announcements have caused serious concerns to investors and stakeholders, quite a number of whom have raised their serious concerns with SIAS," said Mr Gerald.
"NEA could have also issued a notice of default for the construction of Tuas One. Taking NEA as an example, why couldn’t PUB also wait till after the Hyflux scheme meeting to issue the default notice?" Mr Gerald added.
"Wouldn’t that be helpful to the plight of the 50,000 Singapore citizens who have ploughed their money into Hyflux to avoid further uncertainty?
"Couldn’t PUB have waited till the outcome of the restructuring, on how the default could be remedied? Could PUB have waited a little longer?"
Mired in losses, water treatment firm Hyflux has spent the last few months trying to restructure itself.
According to a Mar 1 affidavit, Hyflux chalked up a net loss of S$1.1 billion for the nine months ended Sep 30, 2018, after taking a S$916 million impairment on the carrying value of Tuaspring and other projects.
PUB's announcement left some retail investors seeking to appeal against the agency's decision, with a protest against Hyflux's restructuring plan and recent developments planned for Saturday.
The "ruthless" announcement had been "hard to swallow" for retail investors given that their investments had been used by Hyflux to fund the building of the integrated plant, one investor had told Channel NewsAsia.
SIAS on Monday had also urged Hyflux to provide updates on whether a rescue deal involving Indonesian consortium SM Investments (SMI) was still on the table, in light of recent developments such as the default notice from PUB.