HWT – BT

Hyflux Water Trust secures 20-year China concession

HYFLUX Water Trust’s (HWT) wholly owned subsidiary, Hyflux NewSpring (Yangzhou) Co Ltd, has been granted an exclusive 20-year concession by the government of Jiangsu Province to build, own, operate and transfer an expansion plant next to HWT’s existing waste-water treatment plant in the Yangzhou Chemical Industrial Park.

Upon expiry of the concession agreement, HWT has a first right to negotiate for an extension of the concession term, Hyflux Water Trust Management, the trustee-manager of HWT, said in a statement yesterday.

With a design capacity of 20,000 cu m/day, and an estimated project cost of 50 million yuan (S$9.9 million), the expansion plant is HWT’s second plant in the Yangzhou Chemical Industrial Park – the first being the existing waste-water treatment plant, which was acquired by HWT as part of its initial portfolio at the time of its recent listing.

The combined design capacity of the two plants will be 40,000 cu m/day.

The expansion plant is required to meet the growing industrial demand for waste-water treatment in the concession area. Construction of the expansion plant is expected to begin in the second quarter of 2008. Operation is expected to commence in mid-2009, with full capacity utilisation by 2011.

The Yangzhou expansion plant will contribute to the growth of the HWT portfolio. This is in addition to the expected organic expansion of the initial portfolio, and future acquisitions of assets from parent group Hyflux Ltd, the trust’s manager said.

The expansion plant will be funded by bank credit facilities available to HWT, and is expected to be yield-accretive. It is, however, not expected to have a material financial impact on HWT for the financial year ending December 2008.