Singapore water treatment firm, Hyflux has applied to the High Court today (22 May) to commence a court-supervised process to reorganise its liabilities and businesses.
The company, dragged down by Tuaspring– the first Integrated Water and Power Project in Asia –
marked its first full year losses of $116.4 million in 2017. The company also reported losses in the first quarter of 2018.
Tuaspring provides up to 318,500 m3 or 70 million gallons of desalinated water per day to Singapore’s water supply under a 25-year design-build-own-operate arrangement with PUB.
Singapore’s Prime Minister Lee Hsien Loong, who officiated the opening of the desalination plant in 2013, noted in his speech that “Hyflux won an international competition to design and build this plant. It reflects Hyflux’s capabilities in this rapidly growing industry because theirs was the most unique and cost efficient design.”
Hyflux has been planning to divest its unprofitable Tuaspring water desalination and power plant, held on its books at a value of $1.3 billion. Since October 2016, Hyflux has also been trying to sell the Tianjin Dagang desalination plant in China, which has a book value of $150 million.
Prolonged weakness in the local power market has led to "increasing strain on the Group’s finances, resulting in short-term liquidity constraints in recent weeks", the company said in a statement.
"This has been compounded by restrictions on the repatriation of monies into Singapore from projects overseas, as well as increasing amounts having to be placed in fixed deposit accounts as a requirement for performance bonds to be issued or renewed in support of the existing projects," it added.
"We have commenced a court-supervised liabilities reorganisation exercise for certain entities within the Group," Hyflux said in a letter to stakeholders.
"The main objective of this exercise is to provide much needed space and time for the Group to focus on its ongoing discussions with strategic investors, optimise operations, target areas for growth and complete our projects to keep generating steady cash flow," it added.
Hyflux has sought the court protection to preventing potential proceedings against it in Singapore for six months. "The company is taking this step in order to protect the value of its businesses while it reorganises its liabilities," Hyflux added.
Hyflux run by former NMP
Hyflux was founded by Olivia Lum, who hailed from Malaysia. She is currently the Chairman and Group CEO of Hyflux.
Lum holds several positions in public service. She is a board member of SPRING Singapore, the National University Singapore Council, and the Singapore Exchange, as well as the president of the Singapore Water Association. She is also a member of the UNESCAP Business Advisory Council and the Singapore Green Plan 2012 coordinating committee.
Lum was a Nominated Member of Parliament from 2 July 2002 to 1 January 2005. In 2003, she was awarded the International Management Action Award, followed by the Global Female Invent and Innovate Award the following year.
On October 3, 2008, Lum resigned her position as independent non-executive director of the Singapore Exchange and relinquished her position on the audit, regulatory conflicts and remuneration committees of the Exchange, according to the Exchange's filing.
And just last month on 20 Apr, Lum also stepped down from the board of ST Engineering.
She said that she was stepping down due to her business commitments.
Read commentary about why Tuaspring lose money, despite it having a 25-year concession from the Public Utilities Board (PUB) to sell water and excess power from the plant.