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Debt-laden Hyflux lines up buyers for Singapore water plant

Sale has ramifications for company's turnaround and city-state's water supply

Singaporean water treatment company Hyflux aims to sell the city-state's biggest desalination plant, Tuaspring. (Photo provided by Singapore Public Utilities Board)
Singapore is preparing to seize control of the country's biggest desalination plant, Tuaspring, on May 17. (Photo provided by Singapore Public Utilities Board)

SINGAPORE -- Water treatment company Hyflux has found eight potential buyers for Singapore's biggest desalination plant as it looks to complete a crucial asset sale before its reprieve from creditors runs out.

The company, whose desalination and wastewater recycling operations help it fill almost a third of the city-state's water needs, will select a buyer by Oct. 15, CEO Olivia Lum told reporters on Thursday.

The Tuaspring  plant has a book value of 1.4 billion Singapore dollars ($1.02 billion) but is losing money on power generation facilities built there in 2016 -- a drain contributing to Hyflux's debt load, which stood at about SG$3 billion at the end of March.

The final price tag will determine whether the sale makes or breaks Hyflux's effort to turn itself around.

The capital-intensive plant drew praise from Prime Minister Lee Hsien Loong when it opened in 2013 but has become a burden on Hyflux, which has pursued a strategy of selling off assets to raise capital for new investments. This approach has not worked with Tuaspring.

Hyflux in May asked Singapore's high court for a six-month debt moratorium, during which creditors could not seize its assets. The request was granted in June.

Aside from negotiating with existing lenders, the company is also discussing possible new financing with strategic investors, said Lum, who founded Hyflux.

Hyflux helps reduce Singapore's reliance on neighboring Malaysia for fresh water. That role looked set to grow even more important following to the recent return to power of Malaysian Prime Minister Mahathir Mohamad, who has said the city-state pays "manifestly ridiculous" low prices for Malaysian water.

Nevertheless, Lum denied speculation that Singapore's government would support Hyflux's restructuring effort, saying "we are a private-sector company."

The company has also had trouble finding a buyer for a desalination plant in the northern Chinese city of Tianjin. After receiving lower offers than it desired, Hyflux is soliciting another round of bids in cooperation with the local government, said Lum.

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