Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on May 25, 2018

KUALA LUMPUR: Malayan Banking Bhd’s (Maybank) share price fell sharply yesterday, possibly on concerns over its exposure to Singapore-listed water treatment company Hyflux Ltd, which on Tuesday sought court protection to reorganise its business and address its debt pile.

Maybank closed 3.9% or 42 sen lower at RM10.26 yesterday, with more than 84.9 million shares traded.

Earlier, it fell by 7.6% to its intraday low of RM9.87. The stock was one of the most active counters on Bursa Malaysia yesterday.

Maybank Singapore and Maybank Kim Eng were the lead arrangers, sole underwriters and bookrunners for an 18-year S$720 million (RM2.14 billion) term loan facility to Hyflux’s subsidiary Tuaspring Pte Ltd to fund its desalination and power plants.

Tuaspring, which is the first integrated water and power project in Asia, had been affected by the impact of depressed electricity prices in Singapore, said Hyflux executive chairman and group chief executive officer Olivia Lum in her letter to shareholders on Tuesday. As a result, Hyflux recorded its first full year of operating losses in 2017.

Lum said by taking a step back to “assess holistically how to reorganise the liabilities”, the group stands to protect the viability of its core businesses and position itself for long-term sustainable growth. Hyflux and five of its subsidiaries, Hydrochem (S), Hyflux Engineering, Hyflux Membrane Manufacturing (S), Hyflux Innovation Centre and Tuaspring, filed the court application on Tuesday and have appointed WongPartnership as its legal adviser and Ernst & Young Solutions as its financial adviser.

With the share price decline, Maybank saw about RM4.59 billion wiped off, leaving it with a market value of RM112.1 billion.

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