SINGAPORE (Reuters) - Singapore water treatment firm Hyflux Ltd, which is in the midst of a court-supervised reorganisation, said Indonesia’s Salim Group and Medco Group had agreed to acquire 60 percent of the company for S$400 million ($290 million), a move that gives it a lifeline for its struggling business.
The new joint venture called SM Investments Pte Ltd has also agreed to give Hyflux a loan of S$130 million, Hyflux and the two Indonesian firms said in a joint statement on Thursday.
“The investor was identified by the company through a competitive bidding process undertaken by the company as part of its restructuring plans,” Hyflux said, adding that the investors would also give it a S$30 million loan ahead of the proposed equity investment to meet its working capital requirements.
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 Bhd is the project’s main lender.
Hyflux’s Group Chief Executive Officer Olivia Lum, who founded the company in 1989 and has grown it into firm employing 2,300 people, said the new investment will enable Hyflux to tap into the Indonesian market.
“Indonesia will be a big market for us,” she told a news conference. She said Hyflux would not need to sell Tuaspring but she did not give details.
Hyflux has built two of Singapore’s desalination plants that can meet up to 25 percent of the city-state’s water needs. In the past few years, the company had expanded in the Middle East and Africa using debt to fund its growth.
The company’s total liabilities stood at S$2.6 billion at the end of March. It had previously said it was reorganising its business after lower electricity prices hurt its finances.
“With our experience and strong track record in owning and operating businesses in energy, renewables, utilities and gas across Southeast Asia, we are confident we can unlock the full potential of Hyflux,” said Medco Group’s founder Arifin Panigoro.
Shares of the company, which went public in 2001, were last traded at S$0.21 in May this year versus a peak of S$2.876 in 2010.
Hyflux started the process of a court-supervised reorganisation of its business in May to protect it against creditors as it restructured its debt.
($1 = 1.3778 Singapore dollars)
Reporting by Fathin Ungku; Writing by Anshuman Daga; Editing by Amrutha Gayathri and David Evans