SINGAPORE - Hyflux and its former white knight SM Investments (SMI) have clashed over what led to the death of a $530 million restructuring deal.
Refuting SMI's claims of being "surprised" by Hyflux's move, the water treatment company said in a near-midnight statement on Thursday (April 4) that it pulled out because of SMI's "repeated refusal to commit to making the investment necessary for the restructuring".
Since March 25, Hyflux said it had written multiple times seeking SMI's commitment to making the investment, as well as written confirmation of its commitment, and had warned that it would otherwise be entitled to terminate the rescue plan. But SMI, in its lawyers' letter dated Thursday, declined to provide the written confirmation, Hyflux said.
Hyflux also disputed SMI's allegation of a "threat to a third major project". It said this relates to SingSpring Trust, in which Hyflux holds a 30 per cent minority interest.
The majority interest holder, Keppel Infrastructure Fund Management (KIFM), had written to Hyflux last Friday to state the holding of scheme meetings, announced by Hyflux on Feb 22, "entitles it to exercise buy-out rights under the terms of the relevant agreement between (Hyflux) and KIFM".
This means KIFM may elect to buy part or all of Hyflux's interest in SingSpring for value, subject to regulatory approvals. Hyflux said KIFM sought to reserve those rights.
Specifically, KIFM requested confirmation that it would not be subject to the schemes proposed and that its buy-out rights would not be compromised by the schemes. Hyflux provided such confirmation on Monday.
Hyflux added that it is important to note that KIFM's letter does not indicate whether it intends to exercise such buy-out rights, and there can be no assurance that KIFM will ultimately choose to do so.
Accordingly, there is no "threat to a third major project", Hyflux said.
Hyflux added that SMI had been given the relevant agreement since Sept 15 last year and has been "well aware of KIFM's buy-out rights which KIFM is entitled to exercise" in the event of Hyflux convening a scheme meeting.
Hyflux also said that SMI had "for close to a month, rebuffed all attempts to meaningfully engage... on what exactly its concerns over Hyflux's working capital needs were".
Despite being asked "multiple times over the past month," SMI has not explained how the further information it has received necessitates a "reassessment" of the working capital needs of the group.
It added that SMI was aware of the tight timelines Hyflux faced in light of the April 16 deadline for both partiesto get the restructuring plan approved.
"It was aware that there would be insufficient time to accommodate any change in the settlement amount under the schemes if it did not postpone the April 16 deadline. However, despite being prompted on multiple occasions, SMI not only failed to offer to postpone the deadline, but stated that it would not agree to any variation of the terms of restructuring agreement," Hyflux said.