Hyflux has challenged Salim-Medco’s justification for intending to withdraw from its bailout deal with the debt-ridden homegrown water firm.
The Business Times (BT) reported Hyflux as saying in response to questions from the Securities Investors Association Singapore (SIAS) on Tue (26 Mar) that it “has been advised that Salim-Medco cannot rely on the PUB’s termination of the WPA to lawfully and effectively terminate the restructuring agreement prior to the long-stop date”.
Instead, the company revealed during a bourse meeting on Tue that “certain disagreements have recently emerged” between the company and SM Investments Pte Ltd, the Singapore unit of the Indonesian-based Salim Group, according to BT.
However, despite being “unable to meaningfully engage” with the consortium, Hyflux’s restructuring agreement with Salim-Medco “remains in force and the investor has not stated that it will resile from its proposed investment,” said the firm.
BT also reported Hyflux as saying that before the restructuring plan was published on 16 Feb, it has already reached a mutual agreement with the consortium on the commercial terms regarding the overall allocation of cash and equity.
This, according to the firm, is contrary to Salim-Medco’s claims that the company has not agreed to the commercial terms of their restructuring plan, particularly “the aggregate cash amount of S$272 million for distribution to relevant creditors, with S$271 million to be derived from the intended investment”.
In the event that the consortium “wrongfully terminates” its restructuring agreement with Hyflux, the company said that it it is entitled to claim the S$38.9 million deposit from Salim-Medco’s proposed investment, which, according to BT, “was placed into escrow shortly after the agreement was executed”.
PUB’s statements not a “threat” to Hyflux and Tuaspring, as WPA has yet to be terminated by the Board: Hyflux
Hyflux, in the same bourse filing, also responded to speculation surrounding PUB’s intention to seize its Tuaspring desalination plant, stating that it does not consider itself threatened by any announcements made by the Ministry of Environment and Water Resources (MEWR) statutory board regarding the firm and its plant so far, as PUB has yet to terminate the Water Plant Agreement (WPA) with the firm.
The firm added that PUB will technically be able to terminate the WPA on 6 Apr at its earliest, but should a 30-day notice from PUB be included, the agreement will only be officially terminated on May 6.
The latter date far exceeds the long-stop date fixed by the Salim-Medco consortium on 30 Apr, which means that the Salim-Medco consortium’s termination of the restructuring agreement will only take effect after the completion date of its investments in Hyflux.
While Hyflux has decided to call off its third town hall meeting, it will proceed with the scheme meetings with its creditors as scheduled on the 5th and 8th next month, in addition to an extraordinary general meeting on the 15th the same month.
Salim should not use possible seizure of Tuaspring to justify terminating its deal with Hyflux: PUB
In its press release last Fri (22 Mar), PUB claimed that Hyflux has “noted that PUB’s actions … would be favourable to” Tuaspring.
This is because, according to PUB, Hyflux suggested that the Board’s actions will lift “the pressure on the rest of the Hyflux Group”.
Consequently, the value of Hyflux and its shares will most likely observe a positive change as a result of PUB’s actions, according to the statutory board.
The Board added that its takeover of Tuaspring “will also increase the chances of Hyflux being successfully restructured”.
“PUB’s actions should therefore not be used as the basis for SM Investments’s decision to withdraw from the Restructuring Agreement”, stressed PUB.
PUB also assured in its press release on Fri that it has “the operational capabilities, experience and manpower to run” the Tuaspring desalination plant.
As Singapore’s national water agency, PUB is responsible for managing the Republic’s water supply via the Four National Taps, namely local catchment water, imported water, NEWater, and desalinated water.