New TuasOne agreement will have 'overall material adverse impact' on Hyflux

However, the new agreement will create a more stable condition for the present debt restructuring exercise for Hyflux, said the company. ST PHOTO: CHONG JUN LIANG

SINGAPORE - The new agreement to ensure continued funding for the TuasOne waste-to-energy project will have an "overall material adverse impact" on Hyflux's financial performance, the company said in a bourse filing on Monday (Dec 30).

On Dec 26, the embattled water treatment firm announced the transfer of the remainder of the TuasOne engineering, procurement and construction (EPC) contract to Mitsubishi Heavy Industries Asia Pacific through a deed of novation.

It remains the majority shareholder of the TuasOne project with a 75 per cent stake, while Mitsubishi Heavy Industries holds the other 25 per cent.

The National Environment Agency (NEA) told The Straits Times that it has been monitoring discussions among the stakeholders of the TuasOne project and "is supportive of the stakeholders' actions taken to complete the project expeditiously".

The TuasOne facility is expected to be operational in January 2021, the agency added.

It is at least 96 per cent completed and was slated for completion in May this year, but funds dried up for Hyflux.

Hyflux teamed up with Mitsubishi Heavy Industries to sign an agreement with NEA in October 2015 to build Singapore's sixth and largest waste-to-energy plant.

TuasOne was intended to provide waste-to-energy services to NEA over a 25-year period from 2019 to 2044 and was designed to add 3,600 tonnes of incineration capacity per day to Singapore's waste disposal system.

In Monday's filing, Hyflux said that while the termination of the previous settlement agreement with Mitsubishi Heavy Industries would discharge certain liabilities of the group, the novation of the EPC contract and the division of the remaining payments are expected to result in the group giving up "certain rights to a portion of the proceeds from the construction revenue earned".

However, the new agreement will "create a more stable condition for the present debt restructuring exercise" for Hyflux, the company added.

Hyflux has found itself saddled by a mountain of debt after it expanded into the energy business through water and power plant Tuaspring, which has since been taken over by national water agency PUB.

A debt moratorium for the company has been extended until the end of January 2020, with the next hearing scheduled for Jan 29.

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