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Hyflux takes Salim-led group to court over aborted bailout

Singaporean water company claims $28m deposit as debt deadline nears

Hyflux needs to find a new sponsor before a debt moratorium expires on April 30.

SINGAPORE -- Embattled Singaporean water company Hyflux has taken legal action against an Indonesian consortium led by conglomerate Salim Group, bringing their spat over a collapsed bailout deal into the courts.

Hyflux on Monday said it filed a writ of summons to Singapore's High Court to commence action against the consortium for a "repudiation of the restructuring agreement" the two sides had reached in October.

The company also seeks to secure a 38.9 million Singapore dollar ($28 million) deposit placed into escrow after the parties reached the agreement, which promised to help Hyflux escape a financial crisis.

This follows the collapse of the deal on April 4, when Hyflux said it "has no confidence that the [consortium] is prepared to continue to complete the proposed investment." In a separate statement the same day, the Indonesian group said it was "surprised by the action taken by Hyflux" and its "purported termination" of the accord.

The Indonesian consortium was not ready to comment on the legal action when reached by the Nikkei Asian Review on Monday.

Last October, the Salim consortium agreed to inject a total of SG$530 million into Hyflux in exchange for a 60% stake. The money was to be used as working capital and to pay off debt.

At the time, the deposit was not disclosed, and nor were any clauses concerning termination of the deal.

But Hylux in late March warned it would claim the SG$38.9 million deposit if the consortium "seeks to wrongfully terminate the restructuring agreement," after the Salim side hinted it might withdraw.

The consortium was apparently unhappy about the way Hyflux disclosed material information.

In its statement on Monday, Hyflux did not say how it would use the SG$38.9 million if it manages to obtain the funds. Hyflux's liabilities stood at about SG$2.7 billion as of September, of which SG$900 million is held by retail investors who poured their savings into what was once a star on Singapore's business scene.

The collapse of the Indonesian bailout means Hyflux must secure an alternative sponsor by April 30, the end of a debt moratorium granted by a court. Otherwise, the company is likely to face liquidation.

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