Hyflux Struggles To Settle Debts, SMI To Sue, Maybank Cancels

 Office workers walk to the train station during evening rush hour in the financial district of Singapore
The financial district of Singapore is busy as construction goes on in the background in Singapore's very expensive real estate. (Photo: REUTERS/Edgar Su)

Singapore-based water giant Hyflux continues to struggle with its debts but is reportedly in talks with potential investors as SM Investments announced on Friday that it would sue the water company over the former's cancellation of the rescue deal SMI offered.

According to the Straits Times, the water desalination firm is in a race to save the company from having Tuaspring taken over by Singapore's Public Utilities Board (PUB) in 30 days. The water giant is reportedly in talks with potential white knights.

While Hyflux has a chance to find a new buyer that will show interest for the debt-laden desalination firm, it is also faced with an impending lawsuit from its former white knight, SM Investments.

SMI said it is set to sue Hyflux over the $530 million rescue deal that it previously offered to the company but was later canceled by the latter. If the lawsuit pushes through, the two firms will have to settle in court on which company gets the $38.9 million deposit that SMI put up for escrow.

SMI claimed that Hyflux tried to drop the rescue deal on April 4 and at that time, the investor refused the deal's cancelation. "This was a repudiatory breach of the agreement by Hyflux entitling SMI to terminate the restructuring agreement," the investor said in a statement.

Aside from canceling the deal without an agreement from SMI's side, Hyflux reportedly failed to meet several conditions under the deal. These conditions include a plan of action on how the troubled water firm will settle its debts with creditors.

Following SMI's announcement of its plans to sue Hyflux, the latter confirmed that Malaysia's Malayan Banking Bhd (Maybank) has decided to terminate its collaboration agreement signed in July 2018 with the Singaporean company.

According to The Star, Maybank is Tuaspring's only secured investor. With the collaboration's termination, Hyflux will have to submit to an execution of a binding agreement if it secures a deal with a new investor.

Amid debt issues and deal cancelations, Hyflux said operations at Tuaspring and its power plant are expected to push through as usual. On the other hand, analysts noted that the latest round of cancellations could play a major role in the company's hunt for a new investor.

PUB clarified on Tuesday that it would retain Tuaspring's existing employees once it takes over the Hyflux plant. The Singaporean board said that under Hyflux's management, the water plant failed to supply the required amount of water under the agreement.

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