Restructuring deal at risk due to Tuaspring default: Hyflux

Hyflux's restructuring agreement with SM Investments may be terminated if defaults by its Tuaspring unit are not remedied within two weeks, the water treatment company said yesterday.

The firm received a notice from SM Investments yesterday that referred to the default notice served on Tuaspring by the Public Utilities Board (PUB) on March 5.

PUB said it would exercise its right to terminate its Water Purchase Agreement with Tuaspring and take control of the plant if all defaults are not fully resolved within the notice period.

The restructuring agreement between Hyflux and SM Investments states that the investor has the right to terminate the agreement if a "prescribed occurrence" occurs. And if the occurrence can be remedied, it must be done within two weeks or another mutually agreed period.

Hyflux or Tuaspring ceasing or threatening to cease to conduct its business is a "prescribed occurrence" within the meaning of the agreement. As a result, SM Investments may assert its right to terminate the agreement if the matters stated in the PUB notice are not remedied by the end of the two-week period, which is April 1.

The restructuring agreement between Hyflux and SM Investments states that the investor has the right to terminate the agreement if a "prescribed occurrence" occurs.

Hyflux and Tuaspring said they are seeking legal advice on SM Investments' notice and are in communication with the firm and PUB.

Under the PUB default notice, Tuaspring has a cure period of 30 days until April 5 or "such longer period as may be reasonable" to consult with the national water agency on the steps it must take to cure the alleged defaults. If the defaults are not cured in time, PUB can also take control of the plant.

A version of this article appeared in the print edition of The Straits Times on March 20, 2019, with the headline 'Restructuring deal at risk due to Tuaspring default: Hyflux'. Print Edition | Subscribe