Photo of TuasSpring power plant from Hyflux’s website

SM Investments (SMI), the Singapore unit of Hyflux’s debt consortium Salim-Medco and the water treatment firm’s former white knight, has announced its intention to sue the company for terminating their bailout agreement.

The Straits Times reported SMI as saying on Fri (19 Apr) that it did not accept Hyflux’s “purported termination” of the rescue deal on 4 Apr.

Instead, it highlighted that it had only ceased the agreement with Hyflux today (19 Apr) in line with their agreement.

The agreement was terminated due to several “termination events”, according to SMI.

“This was a repudiatory breach of the agreement by Hyflux entitling SMI to terminate the restructuring agreement,” said SMI.

SMI also cited Hyflux’s failure to meet certain conditions by the 16 Apr deadline as a basis for declaring the termination of their agreement, ST reported.

For instance, Hyflux was set to convene scheme meetings for stakeholders, during which they will be able to vote on a sanctioned scheme of arrangements regarding the repayment of the firm’s creditors, but this was blocked by Hyflux’s decision to cancel the meetings.

“Each of the termination events entitles SMI to a refund of its deposit in accordance with the restructuring agreement,” said SMI.

SMI’s termination of the rescue agreement succeeds Hyflux’s commencement of civil proceedings against Salim-Medco over a “repudiation of the restructuring agreement” inked last Oct, which was denied today by SMI.

Nikkei Asian Review reported on Mon (15 Apr) that according to Hyflux, it has filed a writ of summons to the High Court regarding the matter.

Salim declined to make any comments in response to Hyflux’s initiation of civil proceedings against the consortium when contacted by Nikkei the same day.

While the firm is seeking to obtain a S$38.9mil deposit that was placed into escrow after the restructuring agreement was executed, Hyflux did not indicate how it would utilise the deposit should it succeed in its civil suit, Nikkei observed.

Despite its looming debt moratorium at the end of this month, Hyflux has declined to make any speculations on its new restructuring plan, following its termination of a S$380mil bailout deal with the Salim-Medco consortium – via its Singapore arm SM Investments – two weeks ago.

Speaking at a case management conference at the High Court on 11 Apr, Hyflux’s lawyer Manoj Sandrasegara of WongPartnership told Justice Aedit Abdullah and lawyers representing Hyflux’s creditors that it is “too premature” to discuss a new rescue plan, The Straits Times reported.

Mr Manoj added that the firm has yet to settle on a further extension of the court-ordered debt moratorium, which protects Hyflux Group from its creditors.

“If we do intend to apply for the moratorium to be extended, we will need about 10 days to two weeks to talk to the creditors about our next steps,” he said.

Justice Aedit, in asking whether Hyflux will seek an alternative to liquidation, cited a letter the court had received from retail investor Violet Seow, which read that she has “no confidence in the restructuring attempt”, and that she is opposed to the further extension of the debt moratorium.

Mr Manoj replied that Hyflux will address the issues raised by investors such as Ms Seow, particularly those from senior unsecured groups, adding that “all options are on the table”, according to CNA.

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