Arab Banking Corp. provided notice that the project company for Hyflux’s Magtaa desalination project in Algeria has made a claim of US$8.53 million under a contract-performance guarantee between the bank, Hydrochem and Hyflux, Hyflux said Tuesday.
The project company, Tahlyat Myah Magtaa, or TMM, has made a demand for immediate payment of that sum from Hydrochem and Hyflux under the contract-performance guarantee, called a counter-guarantee facility, Hyflux said in a filing to SGX Tuesday.
In addition, Hyflux said it has “become aware” TMM has made a claim of around US$56.5 million on a separate performance bond issued by BNP Paribas El Djazair. The company said BNP Paribas hasn’t issued a legal notice over the claim.
“The company disputes TMM’s right to make these claims and is seeking legal advice on the appropriate steps to be taken,” Hyflux said. “The aforementioned claims by Bank ABC and BNP Paribas are expected to have a material impact on the financial performance of the group.”
Algerian Energy Co. (AEC) won the Magtaa contract from the government and sub-contracted it to Hyflux; TMM is a joint venture between AEC and Hyflux. Hydrochem is Hyflux’s water-treatment arm.
In the same filing, Hyflux said that it has filed an application to the Singapore court to extend the moratorium on actions by its creditors; the application will be heard on 25 April.