Sembcorp joins legal proceedings involving divested South African water assets

THE 718 million rand (S$70 million) sale of Sembcorp Industries' (SCI) South African municipal water assets, completed back in 2018, may potentially be reversed as a result of legal proceedings.

However, according to legal advice, the "prospects of this outcome are remote", SCI said in a bourse filing on Monday.

If the divestment is reversed, parties to the deal would have to reapply for the consent of the Mbombela local municipality.

In December 2018, SCI announced that its wholly-owned subsidiary Sembcorp Utilities (Netherlands) NV (SUNNV) had sold the entire stake in Sembcorp Utilities South Africa (SUSA) and the 100 per cent effective stake in Sembcorp Silulumanzi to South African Water Works.

Although it had obtained municipal consent before the sale was completed, the consent is now being challenged in the South African High Court by a party who had made an unsuccessful bid to become a local minority shareholder in Sembcorp Silulumanzi under the government's Broad-Based Black Economic Empowerment programme.

Neither SCI nor any of its subsidiaries were parties to these legal proceedings when they were launched in July 2019.

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To protect its interests, SCI thus requested and was granted approval by the court for SUNNV and SUSA to be joined as parties to the proceedings.

As at Monday, the proceedings are still ongoing, SCI said.

SCI shares finished Friday at S$1.66, down S$0.02 or 1.2 per cent.