SINGAPORE - Hyflux announced on Tuesday (Nov 26) that its subsidiary has been released and discharged from all rights, duties, obligations, claims and demands under a contract for a desalination package in Iran.
Under the contract, the subsidiary, Hyflux International Pte Ltd (HIPL), was to design, manufacture and supply a seawater reverse osmosis desalination package in Bandar Abbas, Iran.
Iranian firm Asia Water Development Engineering Company (AWDEC) had awarded the project to HIPL in April 2018.
However, it was suspended in October 2018, after the US reintroduced sanctions on Iran and pulled out of the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action.
Due to the sanctions, Hyflux was unable to maintain the requisite banking support to receive payment from AWDEC for works to be performed under the contract.
On Tuesday evening, Hyflux said that it had entered into a deed of novation with AWDEC and Horsol Switz Engineering Asia Pte Ltd, for Horsol to replace HIPL in the contract.
The novation of the contract is not expected to have a material effect on the financial performance of the Hyflux group.
It was announced hours after Hyflux said it had finally inked a restructuring agreement with Middle Eastern utilities group Utico for a S$400 million rescue package, following seven months of negotiation.
The insolvent water treatment firm is scheduled to give the Singapore High Court a progress update on Friday, when the court will also determine whether to extend Hyflux's debt moratorium beyond its Dec 2 expiry.