SINGAPORE (Mar 6): Hyflux, the water treatment firm which is undergoing debt restructuring, has received a notice from Singapore’s Public Utilities Board “asserting certain defaults by Tuaspring” under its 2011 water purchase agreement (WPA) with the Hyflux subsidiary.

Terms of the WPA provide a default cure period of 30 days from March 6, 2019, for Tuaspring to PUB on the steps needed to mitigate the consequences of, and cure, any defaults which may have occurred.

If the alleged breaches are not remedied, PUB resolves the right to terminate the agreement with written notice of at least 30 days.

This may entitle investors to terminate Hyflux’s proposed restructuring agreement, says the group in its late night filing on Thursday.

See: Hyflux takes $916 mil impairment for Tuaspring and other receivables

See: Hyflux's perpetual security holders get back only 10% of investment in restructure

See: Clash over $2.7 bil of debt at Hyflux heats up

Hyflux says the company and Tuaspring are currently seeking legal advice on this matter, and will “commence consultations with PUB immediately, as envisaged in the WPA”.

Separately, the manager of ESR-REIT has filed a notice saying its trustee, RBC Investor Services Trust Singapore Limited, on March 1 filed proofs of claim against Hyflux and its subsidiary, Hyflux Membrane Manufacturing (S).

Hyflux Membrane accounted for about 3.5% of total rental income for Dec 2018 as one of the REIT’s top 10 tenants.

For 4Q18, ESR-REIT received rental income from the company of about $2.1 million.  

While the manager maintains that Hyflux Membrane has not defaulted in its rental payment for 8 Tuas South Lane to date, it says ESR-REIT holds another $2.1 million of rental in security deposits the form of bank guarantees which have not been drawn down.  

It adds that the space at 8 Tuas South Lane, which Hyflux Membrane currently occupies, has received leasing interest and enquiries due to its proximity to Tuas Mega Port.

Units in ESR-REIT closed flat at 54 cents on Tuesday, while trading in the shares of Hyflux have been suspended since 21 May 2018.