Hyflux hit with demand from Maybank for immediate payment of $509m; VP for operations departs

The Tuaspring Desalination Plant, a subsidiary of Hyflux, located at 92 Tuas South Avenue 3. ST PHOTO: TIMOTHY DAVID

SINGAPORE - Hyflux said late on Thursday night (April 25) that subsidiary Tuaspring has received a letter of demand from Maybank dated April 23 over payments the bank said was "immediately due and payable".

They comprise $509.1 million drawn down under term loan facilities, a US$44.5 million cash cover for contingent liabilities, along with further interest and legal costs on a full indemnity basis, the beleaguered water treatment firm said in a regulatory filing.

Hyflux said that the term loan and letter of credit facilities provided by Maybank, its biggest secured creditor, under Tuaspring's financing arrangements are "non-recourse to and not guaranteed by the company".

An estimate of $28.0 million in payments is also due to Maybank from hedging agreements. Hyflux added that it is currently unable to precisely determine the exact amount due to currency exchange fluctuations and interest rate movements.

Maybank had reserved its rights under the hedging agreements entered as part of Tuaspring's financing arrangements, it said.

"The demand from Maybank, like the termination of the collaboration agreement, is expected to have a material impact on the financial performance of the group," Hyflux said.

Maybank has also issued a notice telling Tuaspring not to sell, remove, transfer or dispose its property charged to a debenture, as the floating charge over said property has crystallised.

This excludes the sale of Tuaspring's desalination plant and shared infrastructure to the Public Utilities Boar as per the water purchase agreement.

On Friday in a separate announcement, Hyflux announced the departure Chang Cheow Teck, its group executive vice president of operations, who left "to pursue personal interests".

Mr Chang took on the role in November 2017, with a remit to assist the the group CEO in designated areas or issues. During his tenure, he oversaw the execution of Hyflux's TuasOne project from November 2017 to April 2018. From May 2018, in addition to the TuasOne project, he started overseeing the execution of the Oman Qurayyat project, Algeria project and Hyflux's Saudi Arabian projects.

On Thursday, Hyflux had its debt moratorium extended by one more month to May 24, after it had asked the High Court to let it prolong its search for a rescue investor by three more months.

Although it did not have any firm offers, it said it had signed a non-binding letter of intent with one interested party on Wednesday night over "a possible injection of $400 million to be used for equity and working capital purposes and possible urgent interim funding".

Hyflux, however, declined to name the investor and described it only as a developer and owner of water and power utilities in the Middle East. According to an affidavit filed on Tuesday, chief executive Olivia Lum said Hyflux is also in early discussions with more parties.

The firm was also hit with two claims totalling US$65.03 million, made by Tahlyat Myah Magtaa SpA, the project company for its Magtaa desalination plant located in Algeria, it said on Tuesday.

On Thursday also, a group of seven unsecured banks were granted leave by the High Court to file applications for Hyflux and its unit Hydrochem to be placed under judicial management and/or interim judicial management. A hearing on the JM application is scheduled for May 13.

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