Maybank terminates collaboration agreement with Singapore’s Hyflux

The Singapore-based firm had received a letter from Maybank terminating the agreement signed in July 2018

By FARA AISYAH / Pic By TMR

Malayan Banking Bhd (Maybank) has terminated the collaboration agreement with Tuaspring Pte Ltd and Hyflux Ltd in respect of the divestment of Maybank’s interest in Tuaspring’s integrated water and power project (IWPP) with immediate effect.

Hyflux, in a filing to the Singapore Exchange last week, had received a letter from Maybank terminating the agreement signed in July 2018.

“Pursuant to the collaboration agreement, the company and Tuaspring agreed to, inter alia, the execution of a binding agreement with a successful bidder/investor for the full settlement and discharge of Maybank’s total liabilities (as defined in the collaboration agreement) by the standstill deadline saved for certain conditions as prescribed in the collaboration agreement.

“There has been no execution of a binding agreement with a successful bidder/investor by the extended standstill deadline. This constitutes a breach which is incapable of remedy under the collaboration agreement entitling Maybank to terminate the agreement,” the Hyflux filing read.

Hyflux added that it has received notices from Singapore’s national water agency, the Public Utilities Board (PUB), and the Energy Market Authority of Singapore issued by Maybank pursuant to the direct agreement between Tuaspring, PUB and Maybank dated Nov 21, 2013.

These notices are in respect of an enforcement event and acceleration of the maturity of all amounts owing under the Tuaspring financing documents.

Maybank intends to appoint receivers and managers over the assets of Tuaspring saved for the desalination plant and shared infrastructure.

“In the interim, the operations of the power plant at the Tuaspring IWPP are expected to continue as usual,” Hyflux noted.

The termination of the collaboration agreement is expected to have a material impact on the financial performance of Hyflux.

In February, Hyflux obtained a timeline extension for the collaboration agreement.

It was the fifth postponement of deadline, and Hyflux had up to Feb 28, 2019, to conclude a binding agreement with a successful bidder or investor for the asset.

Tuaspring had in September 2013 secured a S$720 million (RM2.2 billion) 18-year, term-loan facility from Maybank to fund the development of its desalination and power plant facilities.

Maybank Singapore and Maybank Kim Eng Securities Pte Ltd were the lead arrangers, sole underwriters and bookrunners for the facility.