Hyflux: Maybank issues demand letter to Tuaspring for nearly S$600 million in payments

Maybank branch in SingaporeMalaysian Banking, or Maybank, branch in Singapore

Hyflux said Thursday its troubled Tuaspring plant received a letter from Malayan Banking declaring immediately payable the S$509.12 million drawn down under term loan facilities and US$44.53 million (S$60.72 million) cash cover for contingent liabilities.

Maybank was also seeking interest and legal costs, with payment by 30 April, Hyflux said in a filing to SGX late on Thursday.

Hyflux said Maybank has reserved its rights under hedging agreements which were part of Tuaspring’s financing arrangements.

“As currency exchange fluctuations and interest rate movements directly impact the exposure under these hedging agreements, the company is currently unable to precisely determine the exact amount payable to Maybank,” Hyflux said.

It estimated the amount was around S$28.03 million at end-March.

In addition, Maybank gave notice that Tuaspring was not to sell or otherwise dispose of property related to a debenture, with the exception of the sale of the desalination plant and shared infrastructure to Singapore water regulator PUB, the filing said.

Earlier this month, Maybank said it was terminating its collaboration agreement with the troubled Singapore water infrastructure player with immediate effect due to its failure to reach a binding deal with a bidder or investor.

“The demand from Maybank, like the termination of the collaboration agreement, is expected to have a material impact on the financial performance of the group,” Hyflux said.

Maybank’s loans to Hyflux were substantial: A CGS-CIMB research note from August said that the exposure was at S$658.6 million as of the end of 2018’s first half.

The Malaysian bank had agreed to hold off on enforcement action against Hyflux on the condition that the Singapore company would execute a deal with a successful bidder or investor which would fully settle with Maybank.

A deal had appeared within reach and Maybank had provided Hyflux with multiple deadline extensions of their agreement.

SM Investments, a consortium of the Salim Group and the Medco Group, had entered a binding agreement in October to invest S$530 million for a 60 percent stake in Hyflux, which had filed for court protection in May. Hyflux had said 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.

But in early April, Hyflux terminated the deal, saying it had “no confidence” that SM Investments would complete the investment after the Indonesian consortium failed to provide a written commitment it would do so.

The deal’s termination led to PUB rescinding its extension of the default cure period for the contractual obligations of Hyflux’s Tuaspring Desalination Plant. PUB issued a notice to Hyflux that it would terminate its water purchase agreement (WPA) and take over the plant.


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