Atiqah Mokhtar Published on Wed, Jul 07, 2021
The trustee-manager of Keppel Infrastructure Trust (KIT) has entered into a conditional sale and purchase agreement with Hyflux, through its Judicial Manager, to acquire the remaining 30% stake in SingSpring Desalination Plant for $12 million.
Currently, KIT owns the other 70% stake.
Located in Tuas, SingSpring Desalination Plant is Singapore’s first large-scale seawater desalination plant and is capable of supplying up to 136,380 cubic metres of desalinated potable water per day.
“The strategic acquisition of the remaining 30% stake in SingSpring Desalination Plant will enhance the operational and business continuity of the asset, and also strengthen the cash flow stability of the asset,” says Jopy Chiang, CEO-Designate of the trustee-manager.
“This is an opportunity to increase our stake in a stable asset at a level which is expected to be accretive to distribution per unit and offer an attractive risk-adjusted return for KIT,” he adds.
NewSpring O&M, a subsidiary of KIT’s sponsor Keppel Infrastructure Holdings, will take over the provision of operation and maintenance services to the SingSpring Desalination Plant upon completion of the acquisition.
To facilitate smooth transition, the current operations and maintenance team will be offered to continue their roles and duties at SingSpring Desalination Plant with NewSpring O&M, on terms to be agreed.
The acquisition is subject to approvals from PUB, Singapore’s National Water Agency and the lenders under the term loan facility taken up by SingSpring Pte Ltd (in its capacity as trustee for the SingSpring Trust) being obtained.
The acquisition is not expected to have any material financial impact on the distribution per unit of KIT for the FY2021 ending December.
Units in KIT closed flat at 55.5 cents on July 7.