Hyflux to sell majority stake to Indonesian groups
Troubled water treatment firm says Indonesian firms have agreed to acquire 60% of company for $400m
Singapore water treatment firm Hyflux , which is in the midst of a court-supervised reorganisation, said Indonesia's Salim Group and Medco Group had agreed to acquire 60 per cent of the company for $400 million , a move that gives it a lifeline for its struggling business.
The new joint venture, called SM Investments, has also agreed to give Hyflux a loan of $130 million, Hyflux and the two Indonesian firms said in a joint statement yesterday.
"The investor was identified by the company through a competitive bidding process undertaken by the company as part of its restructuring plans," Hyflux said.
Loss-making Hyflux had been seeking strategic investors to raise funds even as it negotiated with other parties to sell its Singapore-based Tuaspring, its combined desalination and power plant, to help pay creditors. Malayan Banking is the project's main lender.
Salim Group chairman Anthony Salim said: "We see tremendous potential for synergies between Hyflux and our existing businesses as well as opportunities within our consortium in which we can involve Hyflux.
"We will work with Hyflux to keep its flagship assets intact, bearing in mind the significance of this company to Singapore."
The consortium has a track record of running diverse businesses in South-east Asia and other parts of the world, as well as experience in owning and operating water and power utilities, power generation and distribution assets, and oil and gas properties.
Medco Group's founder Arifin Panigoro said: "With our experience and strong track record in owning and operating businesses in energy, renewables, utilities and gas across South-east Asia, we are confident we can unlock the full potential of Hyflux."
Founded in 1989 by its group chief executive officer Olivia Lum, Hyflux has built two of Singapore's desalination plants that can meet up to 25 per cent of the country's water needs. The company employs 2,300 people worldwide and has business operations across Asia, the Middle East and Africa.
The company's total liabilities stood at $2.6 billion at the end of March. It had previously said it was reorganising its business after lower electricity prices hurt its finances.
Hyflux started the process of a court-supervised reorganisation of its business in May to protect it against creditors as it restructured its debt.
Shares of the company, which went public in 2001, last traded at $0.21 versus a peak of $2.876 in 2010. Trading was suspended in May. - REUTERS
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