Sembcorp, Keppel, YTL eyeing Hyflux plant

Speculation on Hyflux's sale of its Tuaspring desalination plant comes as the cash-strapped water-treatment and power company expects net cash outflow in the short to medium term. The firm said 22 potential rescue financiers had signed non-disclosure
Speculation on Hyflux's sale of its Tuaspring desalination plant comes as the cash-strapped water-treatment and power company expects net cash outflow in the short to medium term. The firm said 22 potential rescue financiers had signed non-disclosure agreements.PHOTO: LIANHE ZAOBAO

They are reportedly among 22 possible buyers of Tuaspring

Blue-chip firms Sembcorp Industries, Keppel Corp and Malaysian power generator YTL Power International are reportedly among 22 possible buyers of Hyflux's Tuaspring - a desalination plant with a book value of about $1.47 billion.

An acquisition would be a huge boost for the cash-strapped water-treatment and power company.

Asset sales are now key for the company, which had $2.95 billion worth of liabilities as of March 31. Of that amount, $900 million is debt owed to perp and preference shareholders.

Last month, the company said it was in touch with eight bidders, but had yet to receive any firm offers.

Citing sources, Bloomberg reported on Thursday that Sembcorp, Keppel and YTL Power were eyeing the Tuaspring project, which includes South-east Asia's largest desalination plant.

Hyflux chief executive Olivia Lum noted last month: "We all know that under these conditions when the power market is weak, it is very difficult to get good value.

"But it also cannot be so unreasonably low that I can't even pay my stakeholders."

  • $2.95b

    Total value of liabilities for Hyflux, as of March 31. Of that amount, $900 million is debt owed to perp and preference shareholders.

The sale speculation came as Hyflux, which expects net cash outflow in the short to medium term, said 22 potential rescue financiers had signed non-disclosure agreements.

It is not known how many submitted expressions of interest by yesterday's deadline.

The firm and its advisers have held preliminary talks with 15 of these potential rescue financiers, and intend to do the same with the remaining ones.

Hyflux had previously indicated that it was seeking about $200 million in rescue financing.

It also noted in a July 31 affidavit that it expected total net cash outflow of $22.25 million for the firm and its subsidiaries in the period from July 30 to Oct 22.

All in, Hyflux's net cash outflow for the six-month period to Dec 31 is estimated to total $43.2 million.

Hyflux's estimated post-tax profit is $6.22 million for the six months to Dec 31 this year, while profit at its Hyflux Engineering unit is estimated at $5.4 million.

Conversely, losses are expected from the rest of its key subsidiaries for the six months: $39.07 million at Hydrochem (S); $13.34 million at Hyflux Membrane Manufacturing; and $248,000 at Hyflux Innovation Centre.

The company started a court-supervised reorganisation process in May and obtained a debt moratorium, which grants the firm a six-month reprieve from creditors.

Hyflux shares, in which trading has been suspended, last traded at 21 cents on May 18.

A version of this article appeared in the print edition of The Straits Times on August 04, 2018, with the headline 'Sembcorp, Keppel, YTL eyeing Hyflux plant'. Print Edition | Subscribe