Basslink, which is a wholly owned subsidiary of Keppel Infrastructure Trust, said on Tuesday that its finance company was unable to meet the minimum debt service coverage ratio (DSCR), due to a service outage from March to June, resulting in a default.
“Discussions have been ongoing with the financiers on the subsisting defaults under the project financing. To date, the borrower remains current on the debt service and all payments due under the project financing have been fulfilled,” it said in a filing to SGX on Tuesday.
On 28 March 2018, a third-party contractor damaged equipment during routine maintenance work, resulting in a service outage until 5 June, it said.
Hydro Tasmania didn’t accept the 2018 outage was a force majeure event and did not pay Basslink full facility fees from July to August, it said, noting it also didn’t receive facility fees for the period of the outage.
It received an advance payment of A$4.1 million from its insurer in July for the business interruption loss, it said.
But due to the missed facility fees, Nexus Australia Management, which serves as Basslink’s finance company, was unable to meet the minimum DSCR under the project financing for the Basslink Interconnector, resulting in a default of the terms, the filing said.
With Hydro Tasmania resuming full facility fee payments from September, it expects to meet the minimum DSCR by September 2019, as the figure is computed on a trailing 12-month basis, it said.
The project financing ahs no contractual recourse to Keppel Infrastructure Trust, and KIT doesn’t rely on Basslink’s cash flows for its distributions, the filing said, adding the default wasn’t expected to have any impact on the trust’s distribution per unit for the current financial year.
The Basslink Interconnector provides electricity transmission across the Bass Strait to the Australian states of Tasmania and Victoria and the Southern states.
The 2018 Basslink Interconnector outage was unrelated to the outage in December of 2015, which resulted in an ongoing dispute with the state of Tasmania, it said.