Hyflux: In active talks with UAE-based Utico for possible S$400 million investment

Tuaspring Integrated Water & Power Project, Singapore. Source: HyfluxTuaspring Integrated Water & Power Project, Singapore. Source: Hyflux

Hyflux revealed Friday UAE-based Utico FZC, the Middle East’s largest full-service utility and developer, is the investor which provided a non-binding letter of intent for a possible S$400 million injection and possible urgent interim funding.

“The company’s legal and financial advisors are currently engaged in active discussions with Utico’s legal and financial advisors on the terms of Utico’s investment, to be set out in a binding term sheet for execution,” Hyflux said in a filing to SGX late Friday.

“Utico has informed the company that it is aware of the urgency of the restructuring,” Hyflux added.

It said Utico intends to invest in Hyflux on the basis of preserving the troubled Singapore water-infrastructure player’s key entities remain both intact and operational.

Utico also intends to retain Hyflux’s current management and reach an “amicable deal” with creditors and investors, the filing said.

Hyflux noted Utico has a “reputable track record” in the water and power industries, and has strong funding and a diversified investment and project portfolio. The UAE company’s shareholders and investors include sovereign institutions of the Oman, Saudi Arabia, Bahrain and Brunei governments, it said.

The Singapore company hasn’t put all its eggs in Utico’s basket just yet.

Hyflux added that it is simultaneously holding talks with several other parties interested in investing in the group.

That was after Hyflux walked away from a white knight investor in early April.

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

 

While you’re here, we’re hoping you can help us out.

Shenton Wire has been providing you with quick news and market analysis. Help us continue to bring you the news you’ve come to expect and to expand our reach beyond Singapore.

Your monthly contribution will directly fund our journalism.

S$2     S$4       S$8

S$18       S$28       S$88

You can check your existing account here. You can also contact us about other contribution levels or for corporate subscriptions and syndication queries.