SINGAPORE (Mar 18): Hyflux’s restructuring agreement with investor SM Investments may be aborted if defaults by Hyflux subsidiary Tuaspring Pte Ltd (TPL) are not remedied within two weeks.
The water treatment company on Monday announced it had received a notice from SM Investments, which referred to the default notice slapped on TPL by the Public Utilities Board (PUB) on Mar 5.
See: Hyflux restructuring plans rocked by PUB notice to Tuaspring; ESR-REIT files proofs of claims
The national water agency said it would exercise its right to terminate its water purchase agreement with TPL and take control of the plant if all defaults were not fully resolved within the default notice period.
Last Oct, SM Investments -- a consortium between Indonesia’s Salim and Medco groups -- came to Hyflux’s rescue by offering $400 million in exchange for a 60% stake once it has settled all its debts. The consortium is also granting Hyflux a shareholder's loan of a principal amount of $130 million, as well as a $30 million loan to help finance it through the restructuring.
See also: Hyflux gets $530 mil lifeline from Indonesia's Salim and Medco groups
According to the restructuring agreement between Hyflux and SM Investments, the latter has the right to terminate the agreement if a "prescribed occurrence" occurs and if the occurrence can be remedied but not done so within two weeks or a mutually agreed period.
In this case, SM Investments may assert its right to terminate the restructuring agreement if the matters stated in the PUB notice are not remedied by the end of the two-week period, which is April 1.
Hyflux and Tuaspring said that they are seeking legal advice on the investor's notice, and are in communication with PUB and the investor on the matters in the PUB's notice and investor's notice.
Under the PUB default notice, Tuaspring has a period of 30 days until April 5 or "such longer period as may be reasonable" to consult PUB on the steps it must take to cure the alleged defaults. If the defaults are not remedied in time, PUB has the right to terminate the water contract by giving written notice of not less than 30 days to Tuaspring. PUB can also take control of the plant, once the default notice period expires.
