The break-up sale of bankrupted water treatment company Hyflux has begun.
Keppel Infrastructure Trust, which now holds 70% of SingSpring Desalination Plant, will buy the remaining 30% from Hyflux for $12 million.
“The strategic acquisition of the remaining 30% stake in SingSpring Desalination Plant will enhance the operational and business continuity of the asset, and also strengthen the cash flow stability of the asset,” says Jopy Chiang, CEO-Designate of Keppel Infrastructure Fund Management, manager of KIT.
“This is an opportunity to increase our stake in a stable asset at a level which is expected to be accretive to distribution per Unit and offer an attractive risk-adjusted return for KIT,” he adds.
Located in Tuas, SingSpring Desalination Plant commenced commercial operations in Dec 2005, and it is Singapore’s first large-scale seawater desalination plant and can supply up to 136,380 cubic metres of desalinated potable water per day.
NewSpring O&M, a subsidiary of Keppel Infrastructure Holdings (KI), KIT’s sponsor, will take over the provision of operation and maintenance services to the plant.
According to KIFM, this is to enhance the “operational stability” of the plant.
The plant’s current operations and maintenance team will be offered to continue their roles and duties on terms to be agreed.
The acquisition is subject to approvals from PUB, Singapore’s National Water Agency and the lenders under the term loan facility taken up by SingSpring Pte Ltd (in its capacity as trustee for the SingSpring Trust) being obtained.
The acquisition is not expected to have any material financial impact on the distribution per unit of KIT for the financial year ending 31 December 2021.
KIT closed July 7 at 55.5 cents.
