Maybank to terminate Hylux collaboration

SINGAPORE: Malayan Banking Bhd (Maybank) has decided to terminate the collaboration agreement relating to the divestment of the Tuaspring integrated water and power plant (IWPP) with immediate effect, said water treatment firm Hyflux Ltd.

Hyflux announced yesterday that it had received a letter from Maybank terminating the agreement signed with the Singaporebased firm and its unit Tuaspring Pte Ltd in July last year.

Under the agreement, the debtladen Hyflux and Tuaspring had agreed to the execution of a binding agreement with a successful bidder/investor for the full settlement and discharge of Maybank’s total liabilities by the “standstill deadline”.

However, till today, there had been no execution of a binding agreement with a successful bidder/investor by the six-time extended standstill deadline, said Hyflux in a filing with the Singapore Exchange.

“According to Maybank, this constitutes a breach which is incapable of remedy under the collaboration agreement entitling Maybank to terminate the collaboration agreement,” it added.

Maybank is the only secured financier of Tuaspring with an exposure of about S$602.4 million (RM1.84 billion) for the latter’s IWPP.

Singapore’s national water agency, the Public Utilities Board (PUB), had on April 17 issued a notice to Tuaspring to terminate its water purchase pact with Hyflux, aiming at safeguarding the country’s water security.

The termination notice provides a 30-day notice period before PUB takes over Tuaspring’s desalination plant. Hyflux is currently struggling to restructure its debts with its liabilities which reportedly stood at S$2.95 billion as at March 31 last year.

Hyflux also announced that it had received notices from Maybank to PUB and the Energy Market Authority of Singapore in relation to the direct pact between Tuaspring, PUB and the bank dated November 21, 2013.

“These notices were in respect of an enforcement event and acceleration of the maturity of all amounts owing under the Tuaspring financing documents.”

Maybank had stated its intention to appoint receivers and managers over the assets of Tuaspring save for the “desalination plant and shared infrastructure”.

In the interim, Hyflux said the operations of the power plant at the Tuaspring IWPP were expected to continue as usual.