Hyflux, Singapore's much-vaunted water and power company, recently went on a financial slump, leaving each and every one of their investors stunned and confused. This forced the company to seek court protection from creditors in order to restructure.
Hyflux's struggle
The company update came as a surprise, as Hyflux was a company known for seemingly having the gold approval of the country's government, and at one point, even promised its shareholders an annual 6 percent increase forever.
Well at the heart of this problem lies Tuaspring, which is a desalination and power plant that has a cost of S$1.1 billion (US$811 million) to construct. In fact, it's so expensive that it was immediately dubbed as one of the "national taps" for an island that has long been depended on both imported water and sometimes rainwater for survival.
It was a glowing prospect, both for the island and for the company. This resulted in investors funneling hundreds of millions of dollars into the project, its construction, and the company's expansion.
2013 then came with the opening of the power plant, to great fanfare, with even the head of the Public Utilities Board and two government ministers calling Tuaspring "the latest milestone in Singapore's water journey", and Prime Minister Leee Hsien Loong praising the plant's unique and cost-efficient design.
However, the facility, which was under a 25-year water-supply agreement, failed to make any money at all.
Losses and failures
The first losses of the plant happened back in 2016 when the plant's gas-turbine power plant started to sell excess capacity into the power grid. This depleted the company's cash, putting the company under financial struggles.
Of course, many investors expected the government to step in and help. However, this wasn't the case, as the government deemed it as a commercial matter and rejected any calls for intervention. In fact, Hyflux was even given only 30 days to make good on its operational and financial lapses, lest the state would terminate the contract and shut down the plant.
Presently, the deadline for Tuaspring to comply is at April 5, and creditors are given the choice to vote on the company's restructuring plan. This move effectively forces the creditors to accept the deal or risk everything they have on the company.
Per a recent statement from the company, the company plans on altering its payment plan and restructuring its company to help retail investors, guaranteeing that senior lenders and creditors get a share of future payouts.
