Third potential white knight investor for Hyflux makes
non-binding letter of intent for overseas assets 1

Debt-laden water treatment firm and genco Hyflux has received yet another non-binding letter of intent from its third potential white knight investor, which has yet to be named.

The company revealed the development in a Singapore Exchange announcement yesterday afternoon (15 May), during which it indicated that the potential new investor is the one of the top 10 largest desalination companies in the world.

Hyflux added that the investor is “a specialist in the engineering, construction, operation and maintenance of water treatment facilities, in particular water desalination plants, with a focus on build-own-operate-transfer, management of concessions and related services”, according to The Straits Times.

The investor aims to acquire Hyflux’s assets in Algeria and Oman, as well as the operation and maintenance of said assets.

The proposed deal will be subject to “regulatory clearance, due diligence and the execution of a binding agreement, with terms to be mutually agreed”, ST reported.

Hyflux acknowledged that the investor is “conscious of the timeline and has indicated that it would be willing to devote all necessary resources to ensure that the due diligence process and the consummation of the deal is carried out in the shortest possible time frame.”

Previously, Hyflux had received non-binding letters of intent from international multi-strategy investment fund Oyster Bay Fund and Emirati utilities group Utico.

The Business Times reported Hyflux as saying on Fri (10 May) that Oyster Bay Fund has expressed its intention to buy preference and ordinary shares in HyfluxShop Holdings, Hyflux’s consumer water business and partially-owned subsidiary, from the company for up to S$26mil.

Hyflux told BT that it “envisions” almost S$500mil worth of investment from Oyster Bay Fund “subject to regulatory clearance, due diligence and the execution of a definitive agreement”.

In a Singapore Exchange filing on Tue (14 May), Hyflux also explained that the draft term sheet it has received from Utico is to be regarded as binding, as stated by Utico’s advisers.

“To avoid doubt, the company has not accepted or entered into the binding term sheet. (Its) advisers are in active discussions with Utico’s advisers to finalise the proposed terms of Utico’s investment,” said Hyflux.

A previous report by Reuters indicated that following its non-binding letter of intent to Hyflux at the end of last month, Emirati utilities group Utico has made a binding offer to invest S$400mil to the company.

Utico’s chief executive officer Richard Menezes was quoted by Reuters as saying last Sun (12 May) that Utico will provide Hyflux with working capital and any urgent interim funding as a part of the binding offer, and that it would negotiate the matter with Singapore’s national water agency Public Utilities Board and Hyflux’s retail investors.

Maybank, Hyflux’s largest secured creditor, has appointed receivers and managers from insolvency firm Ferrier Hodgson to seize control of the Tuaspring power plant, ST reported.

The Public Utilities Board (PUB), Singapore’s national water agency, will take over the Tuaspring water desalination plant as well as its shared infrastructure starting this Sat (18 May), just a day after the termination of the Water Purchase Agreement with Hyflux.

Sembcorp Industries group chief executive officer Neil McGregor, however, told BT on Wed at the conglomerate’s first quarter results briefing that the group is eyeing the Tuaspring power plant.

“We were once interested… We are keeping our options open. Naturally, if the price was right, this may be of interest to us. But we have to wait and see what transpires… So we… are keeping an eye on the development,” he said.

Sembcorp Industries was reportedly only one of two bidders that were pre-approved by the PUB as the Tuaspring power plant’s potential buyer. However, only Sembcorp had submitted a final bid, and the offer was purportedly “under book value,” according to ST.