Hyflux axes old agreement with Mitsubishi on TuasOne project

HYFLUX on Thursday said it has replaced an old settlement agreement entered into with Mitsubishi Heavy Industries (MHI) on Feb 15 in relation to the TuasOne waste-to-energy project, and entered into a deed for a novation of the engineering, procurement and construction (EPC) contract to MHI. 

The new agreement also covers the division between MHI and Hydrochem of the remaining payments to be made under the EPC contract, and the discharge of certain claims, including a resolution of the matters raised by Hydrochem against MHI via an arbitration notice it filed in January this year. 

Under the previous agreement, MHI agreed to an early injection of an additional S$23 million equity, if there is a firm deal between the parties by end-January. The deal would help to address the liquidity problems and ensure completion of the S$750 million project, said Hyflux founder and chief executive officer Olivia Lum in an affidavit on Jan 11.

The old agreement also included the making of payments to subsidiaries of MHI as subcontractors for the TuasOne project, the discharge of certain claims including those between Hyflux and Hydrochem on one hand and MHI on the other, and addressed certain operational matters regarding the project so as to facilitate its completion. 

In a regulatory filing on Thursday, Hyflux also noted that entry into the new settlement agreement and the deed of novation was necessary to ensure continued funding for the project, notwithstanding the debt restructuring of the group, which is ongoing. 

The novation is expected to have a material effect on the group's financial performance, Hyflux said.