SINGAPORE (THE BUSINESS TIMES) – Keppel Infrastructure Trust’s (KIT) troubled Australian subsidiary Basslink has entered voluntary administration, announced the trustee-manger on Friday (Nov 12).
The decision comes in the wake of ongoing disputes with Basslink’s customer Hydro Tasmania and an unsuccessful sale process with gas pipeline operator APA Group.
Ernst & Young have been appointed voluntary administrators for the Basslink group of companies that owns and operates Basslink Interconnector, a high-voltage direct current interconnector connecting Tasmania to the national electricity market.
In its Nov 12 filing, KIT’s trustee-manager said it understands that the move comes with the long-term interests of Basslink’s creditors, employees and other stakeholders in mind.
Its trustee-manager does not expect a material impact on KIT’s distribution per unit for the current financial year ending next month.
It noted there would be no contractual recourse to the trust for the interconnector, and that the trust does not rely on Basslink’s cash flows for its distributions.
According to KIT, Basslink has reached out separately to the State of Tasmania, Hydro Tasmania and National Australia Bank regarding an arbitration award of about A$39.5 million (S$39 million); A$7.2 million in costs in view of the expiry of a standstill agreement; and letters of demand received from Hydro Tasmania on Oct 28 this year demanding payment amounting to AS$58.6 million.
Basslink chief executive Malcolm Eccles said that while the decision to place the company under voluntary administration was “difficult”, Basslink’s administration felt it was the “best way to effect change while protecting all stakeholders”.
“Basslink emphasises that it has always worked in good faith to progress the implementation of the arbitration awards and to progress the matters under the standstill agreement, which includes engaging the State and Hydro Tasmania with several proposals for a resolution of issues and proposed repayment plans,” said Mr Eccles.
“We know this is a challenging time for our small team and their well-being will continue to be at the front of our minds throughout the voluntary administration process,” he added.
Units of KIT ended 0.5 cent, or 0.9 per cent, lower at $0.545 on Thursday.