SINGAPORE: Tuaspring has been granted a longer time period in which to remedy defaults related to its water purchase agreement with PUB.
The national water agency on Friday (Mar 29) said it had agreed to extend the default notice period from the original deadline of Apr 5 to Apr 30, "subject to conditions". It did not elaborate on what those conditions are.
AdvertisementEarlier this month, PUB had issued a default notice requiring the Hyflux subsidiary to "remedy defaults" arising under the agreement.
The agency said it would terminate its water purchase agreement with Tuaspring and start taking over its desalination plant if the company did not remedy its defaults by Apr 5.
It also said that it was willing to waive the compensation sum it is entitled to under the agreement, and purchase the desalination plant at zero dollars.
[h=3]READ: Hyflux’s Tuaspring plant: The ‘noose around the neck’ that needs to be sold, but can it be done?[/h] AdvertisementAdvertisement[h=3]READ: PUB ready to take over desalination plant at zero dollars if Hyflux's Tuaspring does not resolve defaults[/h]Under the water purchase agreement signed with PUB in 2011, Tuaspring has to deliver up to 70 million gallons of desalinated water per day to PUB for a 25-year period from 2013 to 2038.
Tuaspring, however, has failed to keep the plant reliably operational as required, PUB said earlier this month.
[h=3]READ: PUB’s default notice to Tuaspring complicates Hyflux’s restructuring: SIAS, analyst[/h] On Wednesday, Tuaspring wrote to PUB to request an extension of the default notice period to Apr 30, noting that it is currently loss-making and will require financial support from Hflux, said the water agency.
However, Hyflux’s ability to provide financial support to Tuaspring will depend on whether it is able to complete its restructuring and to obtain investment from its potential white knight Indonesian consortium SM Investments.
"On this basis, PUB has considered (Tuaspring's) request and agreed to extend the default notice period to Apr 30, 2019, subject to conditions," said the agency.
Mired in losses, water treatment firm Hyflux has spent the last few months trying to restructure itself.
[h=3]READ: Hyflux's investor reviewing terms of restructuring plan due to ‘new material information’[/h]According to a Mar 1 affidavit, Hyflux chalked up a net loss of S$1.1 billion for the nine months ended Sep 30, 2018, after taking a S$916 million impairment on the carrying value of Tuaspring and other projects.
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