Embattled water treatment company Hyflux has been saved by Indonesia's Salim Group and Medco Group.
Under the deal, Hyflux is set to receive a S$530 million investment from the 2 Indonesian groups comprising S$400 million for the 60 per cent equity and a shareholder loan of S$130 million. In addition, Hyflux will also get a S$30 million loan as interim working capital until the proposed deal is completed. Hyflux announced this yesterday (18 Oct) in a stock exchange filing.
Hence, when the deal is completed, Hyflux will be controlled by the Indonesians with a majority stake of 60 per cent.
“It is an entire board decision, we have undergone a very vigorous exercise in selecting the best investors for the company, as well as for all the creditors and stakeholders," Hyflux CEO Olivia Lum told the media.
"Salim Group and Medco Group, their big and vast presence in Indonesia will also be an opportunity for Hyflux to go into the Indonesian market," she added.
She also confirmed that the company will continue to stay listed on the Singapore Exchange and added that Hyflux would not need to sell Tuaspring.
Salim Group, one of Indonesia's largest conglomerates already controls power company Pacific Light Power in Singapore. Medco, an Indonesian energy conglomerate, controls and operates the West Natuna Transportation System Pipeline, which delivers gas to Singapore.
Hyflux unexpectedly announced a court-supervised reorganisation of its business in May this year, citing “prolonged weakness” in the local power market. In Jun, it announced that it would not distribute the payment of its S$500m 6% perpetual bonds which was scheduled on 28 May 2018.
Founded in 1989 by Ms Lum, Hyflux built two of Singapore's desalination plants that can meet up to 25 per cent of Singapore's water needs.
PM Lee met President Jokowi on 11 Oct
Coincidentally, PM Lee met Indonesian President Jokowi at a retreat in Bali last Thursday (11 Oct).
They reviewed the progress in bilateral relations and discuss ways to deepen cooperation. They also exchanged views on regional and international developments.
Several bilateral agreements were signed. One of them is the Bilateral Investment Treaty, which establishes rules on how Indonesia should treat investments and investors from Singapore, and vice versa.
The treaty will ensure that the investments of companies operating in the other's land are protected, on top of the protection already accorded under each country's domestic laws.
The pact also ensures that investors have the freedom to transfer capital and profit across borders and protect their funds and assets from being expropriated illegally.