Keppel Infrastructure Trust‘s wholly owned subsidiary Basslink has entered voluntary administration, after ongoing disputes with customer Hydro Tasmania and an unsuccessful attempt to sell the company.
“Basslink has operated in a highly challenging environment for some time,” Malcolm Eccless, CEO of Basslink, said in a statement filed to SGX.
“Given the issues as a result of the cessation of discussions with APA and the ongoing disputes with Hydro Tasmania, it felt that administration was the best way to effect change while protecting all stakeholders,” he said.
“Regrettably, against the backdrop of many issues and having exhausted options, Basslink needed to take proactive action to put Basslink in the best possible position to navigate forward through these challenges,” he added.
In a separate statement, Keppel Infrastructure Trust said that prior to entering administration, Basslink had reached out to the state of Tasmania, Hydro Tasmania and National Australia Bank, as the agent for lenders, over an around A$39.5 million arbitration award and costs of around A$7.2 million currently due, and a letter of demand from Hydro Tasmania demanding payment for A$33.3 million under the Basslink services agreement, which is disputed by Basslink, and around A$25.3 million in arbitration costs. Basslink had also sought forbearance from lenders.
Keppel Infrastructure Trust said the administration filing wasn’t expected to materially impact the distribution per unit for the current financial year.
“Given that there is no contractual recourse to KIT under the financing arrangements currently in place for the Basslink Interconnector and KIT does not rely on Basslink’s cash flows for distributions, the abovementioned update is not expected to have any material financial impact,” the filing said.
Basslink owns and operates a high-voltage, direct current electricity interconnector between Victoria and Tasmania. The interconnector assists in protecting Tasmania against the risk of drought-constrained energy shortages, while providing Victoria and southern states with renewable energy during peak demand periods, the filing said.
Basslink has been problematic for KIT. In June, KIT said it would make an additional S$23.8 million provision for arbitration for the subsidiary related to disputes over the cable’s failure in 2015, The Business Times reported.