Maybank terminates collaboration agreement with Hyflux

Pic by Straits Times, Singapore

SINGAPORE (Bernama): Malayan Banking Bhd (Maybank) has decided to terminate the collaboration agreement relating to the divestment of the Tuaspring integrated water and power plant (IWPP) with immediate effect, said water treatment firm Hyflux Ltd.

The Singapore-based firm announced today it had received a letter from Maybank terminating the agreement signed with Hyflux and its unit Tuaspring Pte Ltd in July 2018.

Under the agreement, the debt-laden Hyflux and Tuaspring Pte Ltd had agreed to the execution of a binding agreement with a successful bidder/investor for the full settlement and discharge of Maybank’s total liabilities by the "standstill deadline”.

However, till today, there has been no execution of a binding agreement with a successful bidder/investor by the six-time extended standstill deadline, Hyflux said in a filing with the Singapore Exchange.

"(According to Maybank,) this constitutes a breach which is incapable of remedy under the collaboration agreement entitling Maybank to terminate the collaboration agreement,” it added.

Maybank is the only secured financier of Tuaspring with an exposure reportedly of about S$602.4mil for the latter’s IWPP.

Singapore’s national water agency, the Public Utilities Board (PUB), had on April 17 issued a notice to Tuaspring to terminate its water purchase agreement with Hyflux, aiming at safeguarding the country’s water security. The termination notice provides a 30-day notice period before PUB takes over Tuaspring’s desalination plant.

Hyflux is currently struggling to restructure its debts with its liabilities which reportedly stood at S$2.95bil as at March 31, 2018.

Hyflux also announced today that it had received notices from Maybank to PUB and the Energy Market Authority of Singapore in relation to the direct agreement between Tuaspring, PUB and the bank 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,” it said.

Maybank has also stated its intention to appoint receivers and managers over the assets of Tuaspring save for the "desalination plant and shared infrastructure”.

In the interim, Hyflux said the operations of the power plant at the Tuaspring IWPP were expected to continue as usual.

The termination of the collaboration agreement is expected to have a material impact on the financial performance of the group, it said.

Hyflux said it would make the appropriate announcements as and when there were any further material developments on this matter.