Troubled water and energy infrastructure player Hyflux said on Monday that investor SM Investments may be entitled to terminate its restructuring agreement with the Singapore company after the Tuaspring plant was issued a default notice.
Earlier this month, Singapore’s national water agency PUB issued Hyflux’s desalination plant, Tuaspring, a default notice and said it would exercise its right to terminate its water purchase agreement (WPA) and take over the plant if contractual obligations aren’t met.
Hyflux said on Monday that the restructuring agreement would entitle SM Investments to terminate the deal due to a “prescribed occurrence,” if it wasn’t remedied within two weeks, or any other mutually agreed period.
The investor sent Hyflux a notice that referred to the PUB notice as amounting to a prescribed occurrence, and gave the company two weeks to remedy the situation, the Singapore company said in a filing to SGX on Monday.
Hyflux added that SM Investments may then assert its right to terminate the deal, although the investor is also entitled to compromise on the matter.
“The company and Tuaspring are seeking legal advice on the investor notice and are in communication with PUB and the investor,” Hyflux said in the filing on Monday.
In October, consortium SM Investments, which is a consortium of the Salim Group and the Medco Group, entered a binding agreement to invest S$530 million for a 60 percent stake in Hyflux, which had filed for court protection in May, saying the oversupply of gas in Singapore’s market had resulted in depressed electricity prices, which hit earnings in 2017 and drove losses in the first quarter of 2018.
In addition, the company said in May that its plan to divest the Tuaspring project in Singapore and the Tianjin Dagang plant in China had taken longer than expected.