Hyflux gets non-binding letter of intent to acquire certain overseas assets, Companies & Markets

Wed, May 15, 2019 – 3:22 PM

UPDATED Wed, May 15, 2019 – 4:11 PM

HYFLUX on Wednesday said it has received a non-binding letter of interest (LOI) from an unidentified potential investor to acquire certain assets of the water treatment firm in Algeria, Oman, the Middle East and the North Africa region.

This makes it the third non-binding LOI the beleaguered firm has received this month from potential investors. 

On top of acquiring the assets, the new investor’s interest includes operation and maintenance activities relating to the assets, as it looks to grow its portfolio of desalination plants, Hyflux said in a regulatory filing.

According to Hyflux, the potential investor is one of the top 10 largest desalination companies globally, and a subsidiary of one of the world’s leading infrastructure companies, “highly ranked for its expertise in transportation and greenfield infrastructure with a presence and workforce spanning five continents”.

The investor is also a specialist in engineering, construction, operation and maintenance of water treatment facilities – particularly water desalination plants – with a focus on build-own-operate-transfer, management of concessions and related services, Hyflux said.

It added that the proposed transaction is subject to regulatory clearance, due diligence and the execution of a binding agreement with terms to be mutually agreed.

The firm added 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 completion of the deal, if any, are carried out in the shortest possible timeframe.

“While the company will consider all serious offers and expressions of interest received, the priority remains for a strategic investor for the entire group,” the firm said, adding that it is continuing its engagement with all potential investors.

Since the start of May, Hyflux has been garnering interest from investors such as United Arab Emirates-based utility firm Utico, and Oyster Bay Fund, a global multi-strategy investment fund.

Hyflux clarified on Tuesday that it had not received a binding offer from Utico, contrary to a Reuters report published over the weekend, in which Utico chief executive Richard Menezes was quoted as telling Reuters a binding term sheet had been submitted to Hyflux last week.

Earlier in the month, Hyflux said it could get an emergency injection of S$400 million from the potential deal from the white knight investor, while keeping key entities “intact and operational” with the funds going towards equity and working capital purposes, as well as “possible urgent interim funding”.

One week later, it identified Oyster Bay Fund as another potential investor, saying it could get up to S$500 million in investment. The fund was also prepared to buy preference and ordinary shares in HyfluxShop Holdings from the company for up to S$26 million as an indication of its good faith and intent, Hyflux said at the time.

Both investors have given non-binding letters of intent to Hyflux.

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