SINGAPORE (Mar 27): Embattled Singapore water treatment company Hyflux’s survival is looking shakier as disagreements with its rescuer deepen.
Hyflux said in a filing that it disputes certain assertions by SM Investments, the consortium of Indonesian businessmen that had agreed last year to take a majority stake in the firm. At the same time, SM Investments is disagreeing with some terms of the restructuring plan put forward by Hyflux, the filing shows.
See: Hyflux's dispute with its rescuer deepens as deadlines near
See also: Hyflux restructuring in jeopardy if Tuaspring defaults not solved in 2 weeks
The disputes heighten the drama of the catastrophic slump of the once-vaunted water and power company. The case involves some 34,000 retail investors who stand to lose almost everything, and a desalination and power plant that cost $1.1 billion and was heralded as one of the “national taps” for Singapore. The cash-strapped company, founded by Olivia Lum, faces mounting pressure as mom and pop investors organise a protest in the city-state this weekend.
Trouble with the rescuer started bubbling up earlier this month when the Indonesian consortium SM Investments threatened to walk away from the debt restructuring agreement.
The consortium had said a default notice served by Singapore’s Public Utilities Board on Hyflux’s Tuaspring desalination and power plant on March 5 constitutes an event that undermined a debt plan and it may abandon the deal if the default isn’t remedied by April 1.
See: PUB to take over Tuaspring plant if Hyflux cannot fix defaults by April 5
SM Investments is also disputing a payout to creditors under the agreement and has “asserted that it does not agree to the terms of the schemes proposed, in particular, the commercial term that an aggregate cash amount of $272 million” will be used to fully settle the financial obligations in the restructuring agreement, Hyflux said in a filing to the Singapore Exchange dated Tuesday.
Hyflux disputed the Indonesia consortium’s assertion that actions taken by the Public Utilities Board constitute events that would allow the group to walk away from the agreement. It said it has received “a further notice” from the investor dated March 25, that another so-called “prescribed occurrence” has taken place, which Hyflux is also refuting.
A successful debt restructuring at the Singapore water treatment company is looking “increasingly remote” and challenges are mounting, Oversea-Chinese Banking Corp said in a credit research note on Wednesday.
Hyflux said that its view is that the investor group is “obliged to honour its commitment to invest under the restructuring agreement” and the group has not stated that it “will resile from the restructuring agreement.”
If the investors seek to wrongfully terminate the restructuring agreement, the terms allow the company to lay claim to a $38.9 million deposit, Hyflux said in the filing.
The company said it will hold meetings with creditors on April 5 and April 8 as scheduled.
