SM Investments terminates Hyflux rescue deal, both parties suing each other

Singapore – On April 19 (Friday), Indonesia’s Salim-Medco consortium SM Investments (SMI) announced the termination of its plans, in “accordance with the terms of the restructuring agreement,” with Hyflux after the latter accused SMI of having breached their rescue deal.

On April 15 (Monday), the beleaguered Hyflux filed a lawsuit against its ex-knight in shining armour, SMI, saying it had “no confidence” on the investments group’s ability to complete the deal.

“In light of (SMI’s) responses and conduct, Hyflux has no confidence that the investor is prepared to continue to complete the proposed SMI Investment, even if all outstanding conditions precedent under the Restructuring Agreement are fulfilled,” noted Hyflux.

Hyflux said it ineffectively “attempted on multiple occasions to meaningfully engage with SMI on its assertions on the structuring agreement.”

In addition to suing SMI, Hyflux is also claiming the S$38.9 million deposit “placed into escrow shortly after the Restructuring Agreement.”

Read related: Hyflux sues Indonesian consortium SMI, claims S$38.9m deposit made after restructuring deal

SMI rejected the accusations made by Hyflux noting that there was no breach in the agreement.

The Indonesian investor, however, is terminating the agreement based on the following events:

– Hyflux tried to cancel the Restructuring Agreement on April 4, 2019, which was a repudiatory breach of the contract thus giving SMI the right to terminate the deal.

– Hyflux did not meet the deadline of April 16, 2019, given by SMI under the Restructuring Agreement, to address certain issues such as the settlement of Hyflux’s debt to its creditors.

– Tuaspring, SingSpring, and Algerian desalination plant Magtaa are still laden with issues that have not been resolved.

Meanwhile, SMI will be suing Hyflux for cancelling the S$530 million rescue deal. Both parties are now eyeing the deposit placed on guarantee.

Should Hyflux win the lawsuit, S$38.9 million does not seem like much compared to Hyflux’s S$2.95 billion debt as of March last year.

Furthermore, Hyflux has until April 30 before its court-sanctioned debt moratorium, which protects the company from its creditors, expires.-/TISG

Read related: Bloomberg writer calls Hyflux saga a “tale of corporate ruin” with 34,000 victims