Maybank terminates collaboration agreement with Hyflux, Tuaspring

People gather during a protest on Hyflux Ltd. debt restructuring plan in Singapore on March 30. Photographer: Bryan van der Beek/Bloomberg

Malayan Banking Bhd. ended a collaboration agreement with Tuaspring and Hyflux Ltd., the latest in the fallout from the failure of the debt-laden Singapore water and power company.

The termination of the agreement is expected to have a material impact on the group’s financial performance, Hyflux said in a statement to the Singapore Exchange. Maybank also stated its intention to appoint receivers and managers over the assets of Tuaspring, save for its desalination plant and shared infrastructure, according to Hyflux.

Hyflux and Tuaspring had agreed to the execution of a binding agreement with a successful bidder or investor for the full settlement and discharge of Maybank’s total liabilities, the company said in the statement dated April 18. There was no execution of a pact by the deadline, constituting a breach that is “incapable of remedy” under the agreement, entitling Maybank to terminate it, Hyflux said.

The Tuaspring desalination and power plant is Hyflux’s key asset and one that’s used as collateral for a loan from Maybank. The company, previously lauded as one of the most successful corporate stories in Singapore, is now saddled with S$2.8 billion ($2.1 billion) of unsecured claims and default notices.

The Public Utilities Board, the national water agency, has said it issued a notice to Tuaspring on April 17 to terminate a water-purchase agreement and take over its desalination plant in a moved aimed at safeguarding Singapore’s water security.

Hyflux said it has received notices to PUB and the Energy Market Authority of Singapore issued by Maybank.

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

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