SINGAPORE: Indonesia's SM Investments on Friday (Apr 19) rejected accusations by Hyflux that it breached a rescue deal that both parties entered into, moving to terminate the plan in “accordance with the terms of the restructuring agreement”.
On Monday, Hyflux said it was suing SM Investments, its would-be white knight, a week after scrapping a rescue deal with it.
Hyflux said it filed a writ of summons in the Singapore High Court “to commence an action against the investor for repudiation of the restructuring agreement”, as well as to claim a S$38.9 million deposit.
Hyflux had previously asserted its right to lay claim to this deposit, which was placed into escrow shortly after the execution of the restructuring deal, should SM Investments “wrongfully terminate” the pact.
Hyflux had said on Apr 4, when it moved to cancel the agreement, that it "attempted on multiple occasions to meaningfully engage with SMI on its assertions on the restructuring agreement" to no avail.
On Friday, SM Investments said it did not accept the termination of the restructuring plan on Apr 4 because it was not done in "accordance with the terms of the restructuring agreement".
SM Investments said its scrapping of the restructuring deal on Friday was based on five termination events:
1. Hyflux wrongfully tried to terminate the Restructuring Agreement by its actions on 4 April 2019. This was a repudiatory breach of the agreement by Hyflux entitling SMI to terminate the Restructuring Agreement.
2. Hyflux was required to satisfy various conditions under the Restructuring Agreement by Apr 16, 2019, failing which the agreement would automatically cease to operate. Hyflux failed to do so. This included the failure by Hyflux to obtain a sanctioned Scheme of Arrangement for the settlement of the amounts it owed to creditors.
3. The Tuaspring project is under threat, and this has not been remedied.
4. The Magtaa project is under threat, and this too has not been remedied.
5. The SingSpring project is under threat, and this also has not been remedied.
SM Investments added: “Each of the termination events entitles SMI to a refund of its deposit in accordance with the Restructuring Agreement.
“SM Investments rejects any accusation by Hyflux that SMI breached the Restructuring Agreement.”
SM Investment said it will now be pursuing legal action against Hyflux.
When contacted, Hyflux would only say that it "maintains its position as stated in previous announcements on the dispute and reserves its rights". It said it would not be appropriate to comment further as it has commenced legal action against SM Investments.
MAYBANK TERMINATES AGREEMENT
Adding to its woes, Hyflux said in a separate company filing early Friday that it has received a letter from secured lender Maybank to terminate a collaboration agreement relating to the divestment of the Tuaspring Integrated Water and Power Plant.
Under the agreement reached last July, Maybank, which is the only secured creditor of Hyflux’s unit Tuaspring, will give the Singapore firm time to conclude a binding agreement with a successful bidder or investor for the plant. During which, the bank will "refrain from commencing enforcement proceedings against Tuaspring or its properties and/or assets", including the integrated plant.
As the restructuring process dragged on, the deadline by which Hyflux has to find a buyer was extended six times, with the last deadline agreed by both parties being Mar 31, 2019.
The integrated asset’s desalination plant is set to be taken over by PUB at zero dollars in May, after the national water agency issued a notice to Hyflux on Wednesday to terminate the parties' water purchase agreement.
As Hyflux did not execute a binding agreement with a successful investor by the deadline, “this constitutes a breach which is incapable of remedy under the collaboration agreement entitling Maybank to terminate the collaboration agreement”, the filing wrote.
Maybank has also stated its intention to appoint receivers and managers over the assets of Tuaspring, except for the desalination plant and shared infrastructure.
The filing added that Hyflux has also received notices issued by Maybank to PUB and the Energy Market Authority, regarding the direct agreement between Tuaspring, PUB and Maybank dated Nov 21, 2013.
“These notices are in respect of an enforcement event and acceleration of the maturity of all amounts owing under the Tuaspring financing documents.”
Hyflux said the termination of the collaboration agreement “is expected to have a material impact on the financial performance of the group”.
In the interim, the power plant at the Tuaspring integrated facility is expected to continue operations as usual, it added.
Additional reporting by Tang See Kit.