SINGAPORE - Water treatment firm Hyflux has suspended a contract for a plant in Iran - a move that is expected to have a material adverse effect on its financial performance.
The contract was signed in April between a Hyflux unit and Iran's Asia Water Development Engineering Company (AWDEC) for a seawater reverse osmosis desalination package in Bandar Abbas.
In July, the Iran firm indicated - through a letter of intent - for a second contract for the project.
Hyflux, whose shares are suspended on the Singapore Exchange (SGX), said it was unable to maintain banking support to receive payment from AWDEC for work under the contract due to the United States reinstating sanctions on Iran.
Hyflux told the SGX on Friday (Dec 14) that it notified the Iranian company on Dec 11 of its decision to suspend the contract with effect from Oct 16.
Separately, Hyflux terminated a joint venture agreement signed in March 2014 with Tolaram Corporation to develop membrane-based water treatment plants in Nigeria.
The agreement involved setting up Yewa Water (Singapore) in which Tolaram and Hyflux had an equal stake.
The termination of the joint venture is not expected to have a material adverse effect on the financial performance of Hyflux.