Sembcorp, YTL to consider pursuing US$1.1bil Hyflux plant

SINGAPORE: Sembcorp Industries Ltd and Keppel Corp are among parties planning to study bids for Hyflux Ltd’s biggest asset, according to people with knowledge of the matter, in a sale that’s key to helping the cash-strapped company get back on its feet.

Hyflux’s Tuaspring project, which includes South-East Asia’s biggest desalination plant, has also drawn interest from generator YTL Power International Bhd, the people said, asking not to be named as the process is private. The asset had a book value of S$1.47 bil (US$1.1bil) at the end of March, according to Hyflux exchange filings.

Hyflux had also reached out to billionaire Anthoni Salim’s Metro Pacific Investments Corp to gauge its interest, the people said.

Suitors would need approval from the Public Utilities Board, which regulates the Singapore water supply, before receiving more details of Tuaspring’s business operations, according to the people. More information, including the price Tuaspring receives for the water it sells to PUB, will be provided to bidders who get approval, according to sources.

Hyflux, saddled with S$2.95 bil of liabilities, started a court-supervised reorganisation process in May and obtained a six-month debt moratorium. The water treatment firm is led by founder Olivia Lum, who was a poster child for Singapore entrepreneurs before Hyflux’s finances were strained by an illtimed entry into the energy business.

Hyflux expects to get binding bids for Tuaspring by Oct 1, Lum said last month, as the embattled water treatment and power company finds a solution to repay stakeholders amid restructuring efforts. The company agreed with main creditor Malayan Banking Bhd to execute a binding agreement with a successful bidder by Oct 15, in return for the lender refraining from starting enforcement proceedings.

The Tuaspring project combines a desalination plant and a gas turbine power plant. It has a designed capacity of 318,500 cubic meters per day of desalinated water and 411MW of power, according to its website.

Lum said last month there are eight interested parties for Tuaspring. Bids for the project shouldn’t be “so unreasonably low” that the firm can’t pay back its stakeholders, she said at the time. A representative for Hyflux said the company is unable to comment, as the Tuaspring divestment process is ongoing.

Sembcorp said by email that from time to time, the company may evaluate different opportunities. There’s no assurance any such discussions will lead to a transaction, according to Sembcorp.

Keppel said in a statement that it’s always evaluating opportunities where it is able to grow its businesses.

YTL Power managing director Datuk Yeoh Seok Hong couldn’t immediately be reached by phone and didn’t respond to emailed queries.

“We were offered to take a look, but we have no details as of now,” Metro Pacific President Joey Lim said in response to Bloomberg queries.