CFA Society Singapore
SINGAPORE (Oct 18): Two of Indonesia's largest companies have come to the rescue of Hyflux which is saddled with some $2.95 billion worth of debt as at end-March.
SM Investments, a consortium made up of The Salim Group and the Medco Group, will invest $530 million in the water-treatment and power company.
Under a scheme of arrangement, SM Investments will acquire an enlarged 60% stake in Hyflux for $400 million, while granting it a shareholder’s loan of $130 million.
On top of that, SM Investments will grant Hyflux a $30 million loan for the interim working capital requirement of the company for the period before the completion of the investment.
The Salim Group, founded by tycoon Anthoni Salim, is one of the largest conglomerates in Asia and also controls Pacific Light Power, an 800MW power genco in Singapore.
Founded by Arifin Panigoro, the Medco Group comprises, among others, PT Medco Energi Internasional Tbk (MEI), an integrated energy and natural resources company which operates the West Natuna Transportation System Pipeline that delivers gas to Singapore,
Olivia Lum, founder of Hyflux who will lose majority control of the company if the deal goes through, says, “This is an investment from SMI directly into Hyflux. If this restructuring is successful, then we will [keep] all the assets to be in the group. In other words, we will not attempt to sell any more asset.”
“Today is a happy day. We are together. Subsequently, we have a lot of things to do [and] we will leave it to the investors and advisors to work out a plan. [But] we will not able to let you know [our plans] today, as they have mentioned, we want everything intact. Going forward, we still have to engage with lenders and authorities to get clearance,” adds Lum.
Lum also forsees Indonesia potentially being another big market for Hyflux to work with. “There are so much we can do there... desalination and wastewater treatment opportunities. This is not just a lifeline but it is also going to grow the company,” she says.