Proposal in relation to a SCHEME OF …...(d) If you wish to, you may object to the Chairman's adjudication of your Proof of Claim or another Scheme Party's Proof of Claim at a time

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THIS EXPLANATORY STATEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. It contains important information and should be read in its entirety. If you are in doubt about any aspect of the proposed Scheme and/or the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

Unless otherwise defined herein or the context otherwise requires, capitalised expressions used shall have the meanings set out in Appendix A of this Explanatory Statement.

Proposal in relation to a SCHEME OF ARRANGEMENT

Pursuant to Section 210 of the Companies Act (Chapter 50, 2006 Revised Edition)

Between

Hydrochem (S) Pte Ltd (Incorporated and registered under the laws of the

Republic of Singapore with Unique Entity Number 198902670Z)

and

THE SCHEME PARTIES (as defined in the Scheme)

EXPLANATORY STATEMENT Scheme Meetings of each class of the Scheme Parties to consider and, if thought fit, approve the proposed Scheme will be held on 23 April 2020 at 80 Bendemeer Road, Singapore 339949, or such other date or place as may be fixed by the Company and notified to Scheme Parties via SGXNet or Hyflux's website at https://www.hyflux.com/. The actions that the Scheme Parties should take in relation to the Scheme are set out in paragraph 4 of this Explanatory Statement. As a Scheme Party, whether or not you intend to be present at the relevant Scheme Meeting, you are requested to complete and return the Proof of Claim enclosed with this Explanatory Statement by the Record Date in accordance with the instructions and notes contained therein. If you have filed a proof of claim for the previous SMI scheme you are required to file a Proof of Claim again to be able to vote at the Scheme Meetings. If you had filed your proof of claim previously and wish to rely on it, you may indicate your choice on the Proof of Claim.

Subject to applicable law and as provided in this Explanatory Statement, the Company may, prior to the calling of any Scheme Meeting, delete, modify, amend or add to the terms of the proposed Scheme which the Company, upon further consultation with the Scheme Parties as necessary or relevant, may think fit for the implementation of the Restructuring. Details of any deletion, modification, amendment and/or addition will be announced to all Scheme Parties via SGXNet as soon as reasonably practicable after the relevant decision is made. The Company will circulate the draft Implementation Deed and all annexes thereto to Scheme Parties via SGXNet prior to the Scheme Meetings.

Prior to making a decision on whether to approve the Scheme (as defined herein) you should carefully consider all of the information set forth in the Scheme and in this Explanatory Statement. In particular, you should also take note of the risk factors set out in paragraph 13 of this Explanatory Statement. These important risk factors could cause the Group's actual results and future prospects to differ materially from those expressed in this Explanatory Statement (including any forward looking statements).

If you are in any doubt as to what action you should take in connection with the proposed Scheme and/or this Explanatory Statement, the proposals contained in it or the documents that accompany it, you are recommended to seek your own advice immediately from your independent financial, legal or other relevant adviser.

If the Scheme Parties approve the Scheme at the Scheme Meetings, a hearing before the Court is

https://www.hyflux.com/financial-reorganisation-exercise/

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necessary to sanction the Schemes. Any Scheme Party is entitled (but not obliged) to attend the hearing sanctioning the Scheme in person or through counsel, to support or oppose the sanction of the Scheme. The Court hearing to sanction the Scheme is expected to take place on or around 30 April 2020 at a time to be advised.

The statements contained in this Explanatory Statement are made as at the date of this Explanatory Statement, unless another time is specified in relation to them, and the delivery of this Explanatory Statement shall not give rise to any implication that there has not been any change in the information set out in this Explanatory Statement since that date.

Nothing contained in this Explanatory Statement shall constitute a warranty or guarantee of any kind, express or implied and nothing contained in this Explanatory Statement shall constitute any admission of any fact or liability on the part of the Company, the Group or any affiliate of the Company or the Group with respect to any assets to which it or they may be entitled or any claim against it or them. Without prejudice to the generality of the foregoing, nothing in the Scheme or this Explanatory Statement or the distribution thereof evidences to any person, or constitutes any admission by the Company or the Group that a liability is owed to any person in respect of any claim or that any person is or may be a Scheme Party. The failure to distribute this Explanatory Statement to any Scheme Party shall not constitute an admission by the Company that such person is not a Scheme Party.

No person has been authorised by the Company to give any information or make any representation in relation to the Scheme other than those expressly contained in this Explanatory Statement and the accompanying documents and, if given or made, such information or representation must not be relied upon as having been authorised. This Explanatory Statement is issued solely in connection with the Scheme.

The Advisors to the Group are advising the Group (including the Company) in connection with aspects of the Restructuring and will not be responsible to anyone other than the Group for providing advice in connection with the Restructuring.

Further important information is set out under "Important Notice to Scheme Parties" below.

Questions and requests for further information and assistance in relation to the proposed Scheme and/or this Explanatory Statement, including in respect of the submission or delivery of Proofs of Claim and/or Proxy Forms, may be directed to Company through the following channels:

Telephone: +65 3517 7999

Email: [email protected]

Post: Hyflux Ltd, 80 Bendemeer Road, Singapore 339949

The date of this Explanatory Statement is 17 March 2020.

mailto:[email protected]

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TABLE OF CONTENTS

1. Introduction ....................................................................................................................... 4 2. What is a Scheme of Arrangement? ................................................................................ 5 3. Scheme Parties and Scheme Claims ............................................................................... 6 4. What are Scheme Parties required to do? ..................................................................... 11 5. Background to the Scheme ............................................................................................ 12 6. Financial Position of the Group ...................................................................................... 18 7. Rationale for the Scheme and potential alternatives ..................................................... 22 8. Rationale for classes of Scheme Parties ....................................................................... 24 9. Inter-conditionality of the Scheme and the Subsidiary Schemes ................................... 25 10. Salient terms of the Scheme .......................................................................................... 25 11. Implementation of the Restructuring .............................................................................. 30 12. Interests of Directors ...................................................................................................... 32 13. Risk Factors.................................................................................................................... 32 Appendix A – Definitions ............................................................................................................. 34 Appendix B – Restructuring Agreement ...................................................................................... 42 Appendix C – Proof of Claim Forms ............................................................................................ 43 Appendix D – Proxy Forms ........................................................................................................... 5 Appendix E – MHI Settlement Agreement .................................................................................... 6 Appendix F – Overview of Schemes ............................................................................................. 7 Appendix G – Liquidation Analysis ................................................................................................ 8

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IMPORTANT NOTICE TO SCHEME PARTIES

Explanatory Statement Content

This Explanatory Statement has been prepared by the directors of the Company solely to inform the Scheme Parties of the proposals for the Scheme. Nothing in this Explanatory Statement or any other document issued with or appended to it should be relied on for any purpose other than to make a decision with respect to the Scheme. In particular, and without limitation, nothing in this Explanatory Statement or any other document issued with or appended to it should be relied on in connection with the purchase of any shares, warrants, bonds, notes or any other debt or assets of any Group company. Any parties making such investment decision should rely on their own enquiries prior to making such decisions.

The information contained in this Explanatory Statement has been prepared based upon information available to the Company as of the date of this Explanatory Statement. The Company has taken reasonable steps to ensure that this Explanatory Statement contains the information reasonably necessary to enable the Scheme Parties to make an informed decision about the effect of the Scheme on them.

In assisting the Company to prepare this Explanatory Statement, none of the Advisors have verified that the information contained in this Explanatory Statement is in accordance with facts and does not omit anything likely to affect the accuracy of such information and each of those persons expressly disclaims responsibility for such information.

Nothing contained in this Explanatory Statement shall be deemed to be a forecast, projection or estimate of the Company's future financial performance or that of the Group.

Any summary of the principal provisions of the Scheme contained in this Explanatory Statement is qualified in its entirety by reference to the Scheme itself. Each Scheme Party is advised to read and consider carefully the text of the Scheme and in the event of a conflict between the information and terms described in this Explanatory Statement and the Scheme, the terms of the Scheme shall prevail.

Legal, Tax and Financial Advice

The contents of this Explanatory Statement shall not be construed as legal, tax or financial advice. Each Scheme Party is recommended to consult its own professional advisers as to legal, tax or financial advice.

Forward Looking Statements

This Explanatory Statement contains certain forward looking statements with respect to the Company and the Group and certain plans and objectives of the boards of the Company or the Group (as applicable). These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on numerous assumptions and assessments made by the directors (as applicable) of the Group in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. None of directors of the Company and the directors of any of the Group companies, the Company, the Group companies or any other person represents or warrants that our future results, performance or achievements will be as discussed in those statements. By their nature, forward looking statements involve risk and uncertainty, and the factors described in the context of such forward looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward looking statements.

Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Given the risks and uncertainties that may cause our future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Explanatory Statement, undue reliance must not be placed on these

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statements. Neither the directors of the Company or any of the Group companies, nor the Company or the Group, assume any obligation to update or correct any forward looking statements contained in this Explanatory Statement to reflect any change of expectations with respect thereto or any change in the event, situation or circumstances on which any such forward looking statement was based.

Documents Received

You will have been notified by way of advertisement in the Straits Times, the Business Times, and Lianhe Zaobao, and, by way of announcement on SGXNet, that the following documents have been published on the Hyflux's website:

1. this Explanatory Statement;

2. the terms of the Scheme;

3. proxy forms to enable Scheme Parties to vote at the Scheme Meetings; and

4. notices to convene Scheme Meetings.

The Company will circulate the draft Implementation Deed and the draft Restructuring Documents set out in schedules to the Implementation Deed to Scheme Parties via the same or other appropriate manner prior to the Scheme Meetings.

In light of the evolving COVID-19 situation and the accompanying uncertainty, as well as taking into consideration the measures introduced and recommended by the Singapore Government, including restrictions on large organised events, the Company is still considering the best approach to holding the Scheme Meetings. In the event of any further developments, the Company will update the Scheme Parties via SGXNet or such other means as may be appropriate as soon as practicable.

CONTACTS

The Chairman of the Court Meeting and Proposed Scheme Managers

Ms Angela Ee c/o EY Corporate Advisors Pte Ltd and/or Ernst & Young Solutions LLP, or in the alternative, Mr Glenn Peters c/o EY Corporate Advisors Pte Ltd and/or Ernst & Young Solutions LLP

Address One Raffles Quay, North Tower, Level 18, Singapore 048583

Email [email protected]

Legal Advisors to the Group Cavenagh Law LLP and Clifford Chance Pte Ltd

Address Marina Bay Financial Centre, 25th Floor, Tower 3, 12 Marina Boulevard, Singapore 018982

Attention Nish Shetty / Jerald Foo / Xide Low / Loh Tian Kai

Email [email protected]

mailto:#[email protected]

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KEY DATES AND EXPECTED TIMETABLE1

Publication and issuance of notices to lodge Proofs of Claim

9 January 2020, 5 February 2020 and 27 February 2020

Publication and issuance of notice to convene Scheme Meeting

17 March 2020

Last day to lodge Proofs of Claim 11 March 2020

Publication of list of Scheme Parties who have filed Proofs of Claim

18 March 2020

Last day to lodge Proxy Forms 72 hours before the relevant Scheme Meeting

Scheme Meetings2 23 April 2020 10:00 am

Scheme Meeting for

General Claimants

10:00 am

Scheme Meeting for HMM

10:00 am

Scheme Meeting for

the Subordinated

Scheme Parties

Court hearing to sanction the Scheme (if approved at the Scheme Meetings)

30 April 2020 (tentative)3

Scheme Effective Date and Schemes Effective Date To be confirmed4

Extraordinary general meeting of shareholders (EGM) Any day between 30 April 2020 to 15 May 2020 (tentative)5

End of moratorium ordered in 211B Proceedings 30 April 2020

Long-Stop Date in Restructuring Agreement 26 May 20206

The above timetable is only indicative. The above timetable and procedures may be subject to such modification as the Court and/or the SGX-ST may, in their respective discretion, approve and/or decide. Scheme Parties will be kept advised of any changes to the above dates via SGXNet.

1 Scheme Parties will be kept advised of any significant change(s) to the above expected timetable via SGXNet. 2 In light of the evolving COVID-19 situation and the accompanying uncertainty, as well as taking into consideration

the measures introduced and recommended by the Singapore Government, including restrictions on large organised events, the Company is still considering the best approach to holding the Scheme Meetings. In the event of any further developments, the Company will update creditors via SGXNet or such other means as may be appropriate as soon as practicable.

3 This date has been tentatively fixed by the Court for 30 April 2020. Scheme Parties will be kept advised of any changes to the actual date fixed for the Court hearing to sanction the Scheme via SGXNet.

4 The Scheme Effective Date is the date on which the order of Court sanctioning the Scheme is lodged with ACRA. This is expected to be within a period of 2 weeks from the date of the Court hearing to sanction the scheme to allow for finalisation of the order of Court and lodgement and processing by ACRA. The Schemes Effective Date is the date on which the latest of the Scheme Effective Date, the Hydrochem Scheme Effective Date, the HE Scheme Effective Date and the HMM Scheme Effective Date occurs (i.e. the date on which the latest Court order sanctioning the Scheme, the Hydrochem Scheme, the HE Scheme and the HMM Scheme (after it has been approved by the relevant scheme parties) is registered with ACRA.

5 This is the estimated date of the EGM for ordinary shareholders of Hyflux to approve, among other things, the proposed subscription of Shares by the Investor (subscribing through an Investment SPV) for an aggregate subscription amount of up to S$400 million pursuant to the terms of the Restructuring Agreement.

6 Or such later date as may be agreed between the Company and the Investor. This is the latest date by which all Conditions Precedent under the Implementation Deed must be satisfied.

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Hydrochem (S) Pte Ltd

80 Bendemeer Road Singapore 339949

(Incorporated and registered under the laws of the Republic of Singapore with Unique Entity Number 198902670Z)

EXPLANATORY STATEMENT

To: the Scheme Parties

17 March 2020

THIS EXPLANATORY STATEMENT CONCERNS MATTERS WHICH MAY AFFECT YOUR LEGAL RIGHTS AND ENTITLEMENTS AND YOU MAY THEREFORE WISH TO TAKE

APPROPRIATE LEGAL ADVICE ON ITS CONTENTS

Dear Sir/Madam,

Proposed scheme of arrangement ("Scheme") in relation to Hydrochem (S) Pte Ltd ("Company") under Section 210 of the Companies Act (Chapter 50, 2006 Revised Edition) of the Republic of Singapore ("Act")

1. Introduction

1.1 On 22 May 2018, the Company's holding company, Hyflux Ltd ("Hyflux"), announced that applications have been made to the Court pursuant to Section 211B(1) of the Act to commence a court supervised process to reorganise the liabilities and businesses of Hyflux and five (5) of its subsidiaries, namely, the Company, Hyflux Engineering Pte Ltd ("HE"), Hyflux Membrane Manufacturing (S) Pte Ltd ("HMM"), Hyflux Innovation Centre Pte Ltd ("HIC") and Tuaspring Pte LTd ("Tuaspring"). The applications for HIC and Tuaspring were subsequently aborted.7

1.2 Thereafter, Hyflux conducted a competitive process to pursue strategic investments in the overall business of the Group as part of the Restructuring. On 18 October 2018, Hyflux entered into a restructuring agreement (the "SMI Restructuring Agreement") with SM Investments Pte. Ltd. ("SMI"). The SMI Restructuring Agreement was terminated on 4 April 2019 and the scheduled scheme meetings to vote on the schemes of arrangement as contemplated under the SMI Restructuring Agreement were cancelled.

1.3 Following termination of the SMI Restructuring Agreement, Hyflux resumed a competitive process to pursue alternative strategic investments. On 26 November 2019, Hyflux announced that it had entered into a restructuring agreement (the "Restructuring Agreement")8 with Utico FZC (the "Investor") pursuant to which:

(a) the Investor, through the Investment SPV, will subscribe to such number of new Shares representing 95% of the enlarged issued share capital of Hyflux for an aggregate subscription amount of S$300,000,000; and

(b) the Investment SPV will grant Hyflux a working capital line of a maximum amount of S$100,000,000,

(together, the "Proposed Investment").

7 More information on the Restructuring can be accessed at: https://www.hyflux.com/financial-

reorganisation-exercise/ 8 A copy of which is set out under Appendix B of this Explanatory Statement.



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1.4 A condition precedent to the Restructuring Agreement coming into effect is the full and final settlement and/or discharge of the General Claims. See paragraphs 10.8 to 10.13 of this Explanatory Statement setting out other conditions precedent to the Proposed Investment and the effectiveness of the Scheme.

1.5 In connection with the Restructuring and as contemplated under the Restructuring Agreement, the Company intends to enter into a compromise and arrangement with the Scheme Parties in respect of all Scheme Claims pursuant to the terms of the Scheme.

1.6 For a snapshot of the effect of the Scheme, the payouts thereunder and the expected returns, please refer to Appendix F of this Explanatory Statement and paragraphs 10.16 to 10.20 of this Explanatory Statement. The purpose of this Explanatory Statement is to inform the Scheme Parties of the background and effect of the Scheme. It is written and issued pursuant to Section 211 of the Act and in accordance with the applicable procedure and guidance laid down in the Act and by the Court. Unless otherwise defined herein or the context otherwise requires, capitalised expressions used shall have the meanings set out in Appendix A of this Explanatory Statement.

1.7 Please note that this Explanatory Statement does not form the basis of the legal contract between the Company and the Scheme Parties. The legally binding contract between the Company and the Scheme Parties in the event the proposed scheme of arrangement is approved by the Scheme Parties and sanctioned by the Court is the Scheme. The Company has prepared this Explanatory Statement on a best efforts basis, but makes no warranty as to the accuracy or completeness of the information provided herein. The Company reserves the right to amend or supplement this Explanatory Statement and/or the information contained herein.

2. What is a Scheme of Arrangement?

2.1 A scheme of arrangement is a statutory procedure under Singapore law which allows a company to agree a compromise or arrangement with parties to whom it owes obligations towards (or classes of parties), and for the terms of that compromise or arrangement to bind any non-consenting or opposing minority parties.

2.2 A scheme of arrangement becomes effective if:

(a) it is approved by a majority in number (above 50%) representing at least 75% in value of each class of scheme parties present and voting at each scheme meeting;

(b) it is sanctioned by the Court; and

(c) a sealed copy of the order of Court sanctioning the scheme of arrangement is lodged with ACRA.

2.3 The purpose of the Scheme is to effect a compromise and arrangement between the Company and the Scheme Creditors which will apply to all Scheme Claims. If the Scheme becomes effective, it will bind the Company and all the Scheme Parties according to its terms, including those Scheme Parties who did not vote on the Scheme or who voted against it, irrespective of where in the world those Scheme Parties reside or have their seat.

2.4 The Scheme cannot be sanctioned by the Court unless the court is satisfied, among other things, that the relevant provisions of the Act have been complied with and is fair and reasonable (i.e. an intelligent and honest person, a member of the class concerned and acting in respect of his or her own interest, might reasonably approve the scheme of arrangement.)

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3. Scheme Parties and Scheme Claims

3.1 The Scheme is intended to bind the Company and the following classes of Scheme Parties in respect of their Scheme Claims:

3.1.1 the General Claimants who hold General Trade Claims and Other Claims;

3.1.2 HMM which holds the HMM Claim; and

3.1.3 the Subordinated Scheme Parties who hold Subordinated Claims.

3.2 For the avoidance of doubt, the Scheme will not affect any Claim of a Scheme Party that is an Excluded Claim.

General Claimants

3.3 The General Claimants comprise of the General Trade Claimants, who hold General Trade Claims, and the Other Claimants, who hold Other Claims.

3.4 The aggregate outstanding principal amount of all General Trade Claims is approximately S$39.76 million9.

3.5 A list of the General Trade Claimants based on the records of the Company with approximate values of their General Trade Claims is set out below:

General Trade Claimant Approximate Value of General Trade Claim

(in S$10)

ABB Pte Ltd 84,177.60 Ably Engineering & Trading Pte Ltd 517,584.37 Ace-Weld Pte Ltd 16,133.46 Active System Engineering Pte Ltd 156,263.70 Addcel Engineering Pte Ltd 27,896.78 Advance Inspection & Testing (S) Pte Ltd 545,462.21 Aik Hock Industrial Pte Ltd 22,347.27 Al Reem Engineering Co. LLC 1,349,000.00 Allied Freight Logistics Pte Ltd 29,891.99 Allinton Engineering & Trading Pte Ltd 19,067.51 Amcoweld Inc Pte Ltd 9,256.57 American International Industries (Pte) Ltd 79,045.50 Apex Logistics International (S) Pte Ltd 26,901.67 Archer Trading Group 9,936.00 Artlas Pte Ltd 8,831.44 Asia Industrial Gases Pte Ltd 26,273.22 Asiagroup Leasing Pte Ltd 65,190.16 Baker & Mckenzie. Wong & Leow 642,601.66 Ban Soon Cheong Pte Ltd 9,277.97 Barnsburry Engineering (S) Pte Ltd 32,950.93 Beng Siang Machinery Pte Ltd 25,476.70 Beng Soon Machinery Services (S) Pte Ltd 217,975.05 Bentz Jaz Singapore Pte Ltd 21,630.05 Best Global Fuels Pte Ltd 171,754.38 Bok Seng Logistics Pte Ltd 47,936.00 Boon Meng Equipment Rental Pte Ltd 25,565.24 Boon Poh Refuse Disposal Pte Ltd 8,520.11

9 Based on adjudication exercise on 1 March 2019. There may be further changes to the amounts

subject to the outcome of adjudication results following review of the Proof of Claim Forms. 10 All sums denominated in US$ are converted to S$ based on a conversion rate of US$1 = S$1.349 –

please note that the forex rates are based on previous SMI adjudication i.e. as of Record Date, 1 March 2019.

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(in S$10)

Buildmate (S) Pte Ltd 10,392.70 Cabcharge Asia Pte Ltd 12,718.75 Cable Solutions (Sea) Pte Ltd 7,490.00 Central Engineering (Pte) Ltd 12,533.13 Cesco Pipeline Technologies Pte Ltd 7,383.00 Chevalier Singapore Holdings Pte Ltd 12,505.09 China Telecom (Singapore) Pte Ltd 249,022.42 Chint Electric Co., Ltd 1,044,439.99 Choon Huat Engineering Pte Ltd 26,284.76 Chye Guan Huat Transport & Trading 56,912.50 Comtel Solutions Pte Ltd 37,470.85 Continental Steel Pte Ltd 46,783.61 CST Industries Inc 50,998.16 Cyclect Electrical Engineering Pte Ltd 616,770.70 D2A Singapore Pte Ltd 40,740.05 DBS Bank Limited 152,559.56 Dell Global B.V. (Singapore Branch) 5,005.96 Denka Infrastructure Technologies Pte Ltd 12,037.50 Dle Solutions Pte Ltd 162,325.10 Doka Formwork Pte Ltd 852,246.54 Echelon Engineering Pte Ltd 213,690.58 ECO & SONS PTE LTD 6,848.00 Eco-Enviro Trading Pte Ltd 12,305.00 Electser Engineering Pte Ltd 41,400.00 Emerson Process Management Asia Pacific Pte Ltd 13,837.24 Emix Industry (S) Pte Ltd 24,040.23 Energy Recovery Inc 181,447.65 Enviro Pro Green Innovations (S) Pte Ltd 16,852.50 Eth Enterprise Pte Ltd 110,350.40 Evergreen Waste Management Pte Ltd 15,117.45 Everstar Engineering & Services Pte Ltd 50,289.36 Exion Asia Pte Ltd 13,568.24 Fasten Enterprises (Pte) Ltd 16,629.90 Fge Control Pte Ltd 8,488.31 Filedex Marketing (S) Pte Ltd 7,490.00 Flexi Systems (Singapore) Pte Ltd 14,658.24 Fortran Singapore Pte Ltd 7,490.00 Fortune Travel Pte Ltd 76,204.00 Fuji Xerox Singapore Pte Ltd 12,821.25 Gac (Singapore) Pte Ltd 12,303.01 Galmon (S) Pte Ltd 69,161.23 Garbarino Pumps Asia Pte Ltd 24,117.80 Genfor Lease Pte Ltd 17,534.20 Grande Alliance Corporation Pte Ltd 7,333.78 Greensafe International Pte Ltd 8,709.36 H.K. Hardware & Engineering Pte Ltd 419,579.85 H.K.L Scaffolding & Formwork Pte Ltd 344,169.42 Healthway Medical Enterprises Pte Ltd 5,770.33 Hempel (Singapore) Pte Ltd 66,158.10 HG Metal Manufacturing Ltd 6,886.52 Hiap Chuan Hardware (Pte) Ltd 67,784.50 Hiap Teck Metal Co (1968 Pte) Ltd 6,944.30 Hiap Tong Crane & Transport Pte Ltd 92,404.77 Hilti Far East Pte Ltd 31,356.29 Hin Kah Logistics Pte Ltd 286,968.71 Hitachi Systems Digital Services (Singapore) Pte. Ltd. (F.K.A Hitachi 42,586.00

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(in S$10)

Sunway Network Solutions (S) Pte Ltd) Hock Hin Leong Timber Trading (Pte) Ltd 82,299.99 Hock Seng Heng Transport & Trading Pte Ltd 207,436.69 Host Pte Ltd 6,767.38 Hs Xpress Pte Ltd 25,694.98 Huatong Cables (S) Pte Ltd 335,219.23 Hui Fok Pte Ltd 6,245.59 Hup Hin Transport Co. Pte Ltd 172,653.83 Hup Hong Machinery (S) Pte Ltd 16,195.52 Hwa Aik Engineering Pte Ltd 36,770.55 Hwa Cheng Development Pte Ltd 94,926.89 Hydratech Industries Pte Ltd 10,486.00 Imperium Solutions Pte Ltd 33,216.52 Ina Engineering & Construction Pte Ltd 107,600.50 Interion Private Limited 18,799.90 Intermarine Supply Co. (Pte) Ltd 5,756.60 International Paint Singapore Pte Ltd 10,593.00 International SOS Pte Ltd 10,312.31 Island Concrete (Pte) Ltd 18,962.16 Island Orthopaedic Consultants Pte Ltd 50,649.18 J.M. Pang & Seah (Pte) Ltd 25,680.00 Jardine Lloyd Thompson Private Limited 43,041.84 Jenmon International Pte Ltd 31,939.50 Jereco Singapore Pte Ltd 6,335.58 Jotun (Singapore) Pte Ltd 13,218.78 JP Nelson Access Equipment Pte Ltd 5,885.00 JRP & Associates Pte Ltd 82,289.47 K L Au Consultants Pte Ltd 34,240.00 K.U.S Formwork & Scaffolding Pte Ltd 188,001.44 K.U.S Pre-Cast (S) Pte Ltd 45,992.88 Keystone Cable (S) Pte Ltd 67,555.00 KH Foges Pte Ltd 7,801.38 Kian Hock Piling Pte Ltd 158,395.16 Kjm Curry House & Restaurant Pte Ltd 34,322.98 KPMG LLP 30,720.29 Kuehne+Nagel Pte Ltd 22,360.13 Kumpulan Development (S) Pte Ltd 5,720.63 L H Construction And Machinery Leasing Pte Ltd 21,803.16 L.T.M. Corporation Pte Ltd 17,147.84 Lee Construction Pte Ltd 201,441.49 Lee Yuen Engineering Pte Ltd 51,687.03 Leeden National Oxygen Ltd 119,244.47 Leeds HR Solutions Pte Ltd 139,101.00 Leesonmech Singapore Pte Ltd 25,965.05 Lian Wang Trading Pte Ltd 69,523.25 M Metal Pte Ltd 21,091.20 M5 Technologies Pte Ltd 9,330.40 Macvin Pte Ltd 51,971.48 Masstron Pte Ltd 9,597.90 Maxbond Singapore Pte Ltd 222,967.64 Mcknight Engineering Pte Ltd 225,162.64 Megamarine Services Pte Ltd 60,987.38 Megarig Heavy Lift Services Pte Ltd 144,450.00 Ming Hup Trading Pte Ltd 69,502.86 Minimax GmbH & Co. KG (Singapore Branch) 16,050.00 Mitsui & Co. Plant Systems, Ltd. 103,684.14

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(in S$10)

Mitsui Sumitomo Insurance Company Limited 933,157.26 Mooreast Asia Pte Ltd 16,451.03 MUHIBBAH TRAVEL-TOURS & TRADING PTE LTD 106,136.40 National University Health Services Group 66,523.23 Nautilus Maritime Pte Ltd 370,802.63 NDT Instruments Pte Ltd 5,617.50 Nitto Denko (Singapore) Pte Ltd 6,543,027.72 Noggrann Asia Pacific Limited 228,722.95 Nrb Builders Pte Ltd 48,542.99 Ns Bluescope Lysaght (Singapore) Pte Ltd 131,114.79 Nyf Marine Services Pte Ltd 32,100.00 Oceanic Offshore Engineering Pte Ltd 49,613.23 Oscar Pest Pte Ltd 73,998.56 OVS Engineering Pte Ltd 27,540.20 Parexgroup Pte Ltd 26,620.21 Peck Tiong Choon Transport Pte Ltd 178,165.86 Peltech (S) Pte Ltd 15,440.64 Pentair Pacific Rim (Water) Limited 54,177.59 PeopleWorldwide Consulting Pte Ltd 18,426.75 Pipeline Process & Systems Pte Ltd 5,183.08 Pipelink-Beckham Pte Ltd 5,906.40 Pollisum Engineering Pte Ltd 5,831.50 Power Security Guard Agency Pte Ltd 85,238.87 Precept Electrical (S) Pte Ltd 91,159.72 Premier Rent A Car Pte Ltd 7,276.35 PTC SYSTEM (S) PTE LTD 44,572.72 Qinda Engineering Pte Ltd 24,159.52 Qool Enviro Pte Ltd 28,672.13 Quesh Consultants (Pte) Ltd 12,840.00 Raffles Hospital Pte Ltd 58,448.99 Raffles Medical Group 491,654.78 Ramatex Textiles Industrial Sdn Bhd 4,100,960.00 Ranger Investigation & Security Services Pte Ltd 50,897.48 Red Forklifts Pte Ltd 5,916.54 Rentokil Initial Singapore Pte Ltd 5,968.91 RH Synergy (S) Pte Ltd 17,876.14 Ribar Industries Pte Ltd 100,000.00 Rigel Technology (S) Pte Ltd 5,384.03 Rockwool Building Materials (Singapore) Pte Ltd 175,176.42 Samwoh Premix Pte Ltd 19,550.70 Sante Machinery Pte Ltd 7,055.10 Say Guan Transport Services 238,483.12 See Hup Seng Cp Pte. Ltd. 81,685.99 Selas FTPA Lawyers 80,474.88 Shan Xi Liang Pi F&B Pte Ltd 14,197.50 Shimadzu (Asia Pacific) Pte Ltd 5,977.02 Siang Sun Plumbing & Sanitary Pte Ltd 20,865.00 Sigma-Aldrich Pte Ltd 7,481.23 Signify Singapore Pte Ltd 154,368.90 Sika (Singapore) Pte Ltd 5,424.90 Sin Chew Woodpaq Pte Ltd 250,380.00 Sin Heng Heavy Machinery Limited 463,382.24 Sing Heng Hoe Construction (1988) Pte Ltd 73,776.50 Singapore Cables Manufacturers Pte Ltd 111,858.87 Singapore Precision Industries Pte Ltd 30,676.90 Singapore University Of Technology And Design 55,375.54

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(in S$10)

Sinmetal International Pte Ltd 130,993.88 Sistemas De Filtrado Y Tratamiento De Fluidos Sa 70,000.00 Sk Inspection Pte Ltd 10,144.00 Sls Bearings (S) Pte Ltd 10,807.00 Snamprogetti Saudi Arabia Co Ltd (Saipem) 3,201,591.71 Soon Bee Huat Trading Pte Ltd 21,088.89 Spiral Marine Pte Ltd 16,648.74 Srd Pte Ltd 81,148.46 Sree Ram Construction Pte Ltd 60,473.24 Starcity Construction Pte Ltd 214,392.50 Straits Ventura Pte Ltd 7,297.40 Sulzer Pumps Spain, S.A. 196,300.80 Sumitomo Mitsui Finance And Leasing (Singapore) Pte Ltd 726,683.58 Sunnic Pte Ltd 9,068.69 Super Bend Pte Ltd 582,215.01 Super Steel Pte Ltd 33,360.46 Tai Sin Electric Ltd 13,824.40 Taka Hardware & Engineering (S) Pte Ltd 100,019.84 Tan Ah Hui Trading And Transport 31,513.64 Tat Hong Plant Leasing Pte Ltd 855,446.28 Tean Chay Crane Rental Pte Ltd 43,746.05 Tean Chay Earthworks Pte Ltd 219,294.24 Tech Offshore Marine (S) Pte Ltd 574,595.84 Teknik Janakuasa Sdn. Bhd. 242,820.00 Tenda Equipment & Services Pte Ltd 57,076.79 Tenwit Consultants Pte Ltd 55,136.48 The Babbitt Trading Pte Ltd 125,498.16 Thio Employment Consultant Pte Ltd 12,572.00 Thye Hong Esolutions Pte Ltd 130,048.86 Tiong Woon Crane Pte Ltd 381,049.64 TMC Concrete Pumping Services Pte Ltd 152,952.73 Top-Mix Concrete Pte Ltd 591,417.65 Toray International Singapore Pte Ltd 475,682.36 Tristars Engineering And Services Pte Ltd 105,001.02 TUV SUD PSB Pte Ltd 5,230.71 U Printing Press 5,187.00 Uni-Crane Pte Ltd 47,231.00 Unit4 Asia Pacific Pte Ltd 8,974.38 V8 Environmental Pte Ltd 190,919.66 Vas Networks Pte Ltd 6,307.39 Wanco Electric Pte Ltd 92,834.86 Wika Instrumentation Pte Ltd 8,226.17 Wilo (Singapore) Pte Ltd 55,768.40 WKS Industrial Gas Pte Ltd 105,121.09 Wong Partnership LLP 133,871.59 Worleyparsons Engineers Egypt Ltd. 39,110.21 Xin Networks Pte Ltd 11,742.18 Zulin (S.E.A) Pte Ltd 39,578.77 Total: 39,761,991.50

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3.6 Included in the General Trade Claims are the following Claims which are to be included in the Scheme despite not being as at 22 May 2018 a legally valid and binding debt of a definite amount then actually due from the Company:

Name Nature of claim

Ramatex Textiles Industrial Sdn Bhd Disputed amount demanded from Company under contracts entered into on 23 February 2011 and 17 January 2013.

Sumitomo Mitsui Finance And Leasing (Singapore) Pte Ltd

Amounts demanded for leases of equipment left on Company premises in respect of leases entered into on 26 September 2011.

Snamprogetti Saudi Arabia Co Ltd ("Saipem")

Claims in relation to the purchase order reference number 1097360 dated 13 January 2016 between Saipem and Hydrochem Saudi Limited ("HSL"), as amended by an agreement dated 30 January 2019 between Saipem, HSL, the Company and HMM.

Subordinated Claimants Any Subordinated Claims which is as at 30 September 2019 a legally valid and binding debt of a definite amount then actually due from the Company.

3.7 At present, the Company is not aware of any person who may claim to have an Other

Claim against the Company.

HMM

3.8 The HMM Claim is in respect of the Claim by HMM against the Company arising under or in respect of the provision of goods and services for the purposes of the TuasOne WTE Project.

3.9 The aggregate outstanding principal amount of the HMM Claim is approximately S$14.33 million.

Subordinated Scheme Parties

3.10 The Subordinated Scheme Parties comprise of the Intercompany Claimants and the MW Claimants, who hold Intercompany Claims and MW Claims, respectively.

3.11 The aggregate outstanding principal amount of all Subordinated Scheme Claims is approximately S$392.7 million.

4. What are Scheme Parties required to do?

4.1 If you are a Scheme Party, you are entitled to vote at the relevant Scheme Meeting for the purpose of approving the Scheme in the manner set out in paragraphs 4.2 to 4.7 below. The Scheme Meetings will be held on 23 April 2020 at 80 Bendemeer Road, Singapore 339949, or such other date or place as may be fixed by the Company and notified to Scheme Parties via SGXNet or otherwise.

4.2 A Scheme Party may attend the relevant Scheme Meeting in person or may vote by proxy.

4.3 Please note that the terms of the Scheme prescribe that no assignment, sale or transfer of any interest in any Scheme Claim after the Record Date shall be recognised by the Company or the Chairman for the purposes of determining entitlement to attend and vote at the Scheme Meetings. Persons who hold Scheme Claims against the Company as at the Record Date shall be the Scheme Parties. A transferee of an interest in a Scheme Claim after the Record Date will not be entitled to vote at the Scheme Meetings. Such transferee will need to make arrangements with the transferor to ensure that the

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transferor votes in accordance with the wishes of the transferee. Persons who have acquired an interest in a Scheme Claim after the Record Date should contact the person from whom they acquired such an interest to ensure distribution of the relevant Scheme Consideration to them or their nominee pursuant to the terms of the Scheme. The Company and the Chairman accept no responsibility or liability in respect of such matters whatsoever.

4.4 There is enclosed at Schedule 3 of the Scheme and Appendix C of this Explanatory Statement the relevant Proof of Claim forms which were to be submitted by the respective Scheme Parties to the Chairman in respect of a Scheme Claim.

4.5 If a Scheme Party wished to vote at the relevant Scheme Meeting, such a Scheme Party must have completed and returned the Proof of Claim to the address specified in the relevant Proof of Claim form by the Record Date (that is, 5:00 pm, 11 March 2020 (Singapore Standard Time)). Please note that any Scheme Party may be barred from voting at the Scheme Meeting if he or she failed to submit his or her Proof of Claim by the Record Date.

4.6 There is enclosed at Appendix D herein a Proxy Form for all Scheme Parties to be submitted to the Meeting Agent. The relevant instructions for completing and submitting the Proxy Form is set out therein. If a Scheme Party wishes to appoint a proxy to attend the relevant Scheme Meeting and vote, such Scheme Party must complete and sign the Proxy Form enclosed in accordance with the instructions contained therein and lodge the Proxy Form with the Meeting Agent and in any event at least seventy-two hours (72) hours before the time fixed for the Scheme Meeting (ie, Proxy Forms must be lodged before 10:00 am, 20 April 2020).

4.7 Please note that if a Scheme Party fails to lodge a Proxy Form by the stipulated deadline, the proxy or proxies of such Scheme Party shall not be entitled to vote at the relevant Scheme Meeting unless so admitted to vote at the discretion of the Chairman.

5. Background to the Scheme

The Group's Businesses

5.1 As a global provider of sustainable solutions, the Group is committed to resource optimisation and sustainable development. The Group is a specialist in water treatment with full value chain capabilities spanning research and development, manufacturing, engineering, procurement and construction as well as operations and maintenance. Among the top desalination plant providers globally, the Group has developed landmark projects including one of the world’s largest seawater reverse osmosis desalination plants in Algeria and Asia’s first integrated water and power plant in Singapore. In addition to seawater desalination and water treatment, the Group has expanded its offerings to include power and waste-to-energy.

5.2 The Group carries out its business activities in the following key segments:

(a) Engineering, procurement, construction and commissioning ("EPC") services: The development of large-scale desalination, integrated water and power plants and waste-to-energy plants lies at the core of the Group’s business. Depending on the client’s tender specifications, such construction projects are executed on an EPC, Build-Operate-Transfer (BOT) or Build-Own-Operate (BOO) basis.

(b) Operations and maintenance ("O&M") services: The Group also operates water, wastewater, water recycling and desalination plants worldwide over concession periods of up to 30 years.

Background to the Restructuring

5.3 The Group entered the power industry with the Tuaspring Integrated Water and Power Project ("Tuaspring IWPP"), the first desalination plant in Singapore and Asia with an

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on-site power plant that could supply electricity to the project, as well as Singapore's national power grid. The Group's financial difficulties are largely due to its investment in Tuaspring IWPP. Although the outlook for the Singapore power market was favourable at the time the Group was awarded the Tuaspring IWPP project, the excess power generation capacity in Singapore, coupled with the weak demand in the Singapore market resulted in depressed electricity prices, resulting in significant losses for Tuaspring, a wholly owned subsidiary of Hyflux. This had in turn adversely impacted the Group's financial performance since 2016 when the power plant commenced operations. The impact of the weak Singapore power market, coupled with an increase in the reserve margin required by the Energy Market Authority, drove the Group to record its first full year loss for 2017, which continued into the first quarter of 2018. This resulted in the Group having to inject more cash to support the operations of the power plant. While the Group embarked on a divestment exercise for the Tuaspring IWPP in early 2017, the divestment process took longer than anticipated. The need to providing funding to support the operations of the Tuaspring IWPP, coupled with the uncertainty of the divestment of the Tuaspring IWPP or a significant capital injection, raised the real possibility of a liquidity crunch by the middle of May 2018.

5.4 This was compounded by challenges on the repatriation of monies into Singapore from its overseas subsidiaries, as well as increased requirements for monies to be placed in fixed deposit accounts for performance bonds to be issued or renewed in support of the existing projects.

5.5 To address these challenges, preserve value, seek urgently needed capital injection and maintain a sustainable capital structure, the Hyflux board took the view that a transparent and court supervised reorganisation process was in the best interests of all of the stakeholders of the Group and hence applied to the Court to commence the Restructuring.

Steps taken during the Restructuring

5.6 As part of the Restructuring:

(a) the Group conducted a competitive exercise to pursue strategic investments in the overall business of the Group ("Investor Search Process"), which culminated in the execution of the Restructuring Agreement with the Investor as described above at paragraphs 1.2 and 1.3;

(b) the Group adopted various austerity measures to limit costs and expenses of the Group during the Restructuring;

(c) in relation to the Tuaspring IWPP:

(i) the PUB purchased the desalination plant pursuant to the provisions of the water purchase agreement between PUB and Tuaspring ("WPA"), and agreed to waive any compensation sum that may be payable by Tuaspring to PUB under the WPA; and

(ii) Malayan Banking Berhad ("Maybank"), the sole secured creditor of Tuaspring, appointed receivers and managers over the assets of Tuaspring (save for the assets purchased by PUB);

(d) the Group reached an overall settlement with the MHI Group and the lenders to the TuasOne WTE Project, which will ensure continued liquidity for the purposes of constructing the TuasOne WTE Project and allow the TuasOne WTE Project to be completed;

(e) the Group successfully reached an agreement with the Bank of China Limited, Tianjin Dagang Branch ("BOC") to restructure the terms of a loan facility of RMB 617 million ("Tianjin Dagang Loan") for the construction of the 100,000 m3/day seawater desalination plant in Dagang City, Tianjin Province, PRC ("Tianjin Dagang Plant"); and

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(f) the Group divested its interest in 150,000 shares of PT Oasis Waters International in consideration of S$32 million as part of the Group's efforts to streamline its business activities, improve liquidity and focus on its core activities in the infrastructure sector.

Investor Search Process

5.7 Following the commencement of the 211B Proceedings, the Group undertook an intensive search process for a strategic investor. This included seeking out potential investors from past interest indicated, advisors' network targeted approach and engaging in discussions with investors who approached the Group or its advisors following the Applications.

5.8 In the light of the high profile of the Group and the media attention received by the 211B Proceedings, there were multiple unsolicited potential investors who approached the Group. All such options were considered, and the Group also took steps to actively seek out potential investors who may have had an interest in investing in the Group to seek out the best option available for stakeholders. After several rounds of discussions with the potential investors, the offers were developed and considered on the basis of the following criteria:

(a) the value of the investment;

(b) the conditions imposed by the offeror/certainty of the offer;

(c) the financial ability of the offeror to complete the investment;

(d) the timing within which the offeror could complete (bearing in mind the liquidity crunch); and

(e) the offeror's synergies with the Group which could effectively revitalise the business.

5.9 On 18 October 2018, Hyflux entered into the SMI Restructuring Agreement.

5.10 Approximately one month before the schemes of arrangements contemplated under the SMI Restructuring Agreement were intended to be voted on, SMI began to act in a manner that evidenced a lack of intention to complete the investment. This conduct led to a great degree of uncertainty over whether SMI would complete the investment even if the scheduled scheme meetings were successful. Eventually, the SMI Restructuring Agreement was terminated on 4 April 2019 after Hyflux accepted SMI's repudiation of the deal. In view of the termination of the SMI Restructuring Agreement, the scheduled scheme meetings were cancelled.

5.11 Following the termination of the SMI Restructuring Agreement, the Group resumed the exercise of pursing alternative investors. On 15 April 2019, Hyflux announced that it appointed nTan Corporate Advisory Pte Ltd ("nTan") as an additional advisor to the Group in the ongoing reorganisation process. Since their appointment, nTan has provided invaluable advice to the Board in navigating the difficult restructuring process and dealing with the myriad of complex conflicting issues and challenges faced by the Company and the Board. nTan has also played a pivotal role in advising the Board in securing and navigating the negotiations with Utico to reach agreement on the Restructuring Agreement as well as in advising the Board on the other potential investors.

5.12 The search process for alternative investors yielded 8 potential parties with some of whom the Group engaged in active discussions. Given the heightened pace of the restructuring process, and the potential for improved returns to stakeholders from a strategic investment (as opposed to a judicial management or liquidation), the Group has prioritised discussions with potential strategic investors in respect of an investment in the entire Group (as opposed to investors interested in specific parts of the Group's business).

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5.13 Within one month from the termination of the SMI Restructuring Agreement, Hyflux received a non-binding letter of intent from the Investor for the possible investment of S$400,000,000 in the Group, to be used for equity and working capital purposes as well as possible urgent funding.

5.14 Based on the information provided by the Investor, the Investor is the largest private full service utility and developer in the Middle East. It possesses a reputable track record in the water and power industries, in which Hyflux operates. Its shareholders and investors include sovereign institutions of the governments of Oman, Saudi Arabia, Bahrain and Brunei.

5.15 Following an extensive period of negotiations the Hyflux board resolved that it was in the best interests of the various stakeholders that the Group enter into the Restructuring Agreement with the Investor on 26 November 2019. Annexed to the Restructuring Agreement is a creditors' term sheet that sets out the proposed terms of the Schemes (the "Creditors' Term Sheet"). In the early stages of the Restructuring, some of Hyflux's stakeholder group representatives were actively involved in the negotiations over the terms of the Creditors Term Sheet, while being continuously updated on the negotiations over the terms of the Restructuring Agreement through weekly meetings, email correspondence and distribution of each turn of the Restructuring Agreement. The Creditors' Term Sheet was then finalised between the Investor and the Company in the interests of pushing the restructuring timetable forward in the interests of all stakeholders.

5.16 The Restructuring Agreement and the proposed Scheme, as part of the wider Restructuring, are intended to serve a dual function:

(a) enable the Group to seek fresh capital that is urgently required to sustain its ongoing businesses and infrastructure projects; and

(b) comprehensively restructure the Group's financial obligations. The Restructuring allows the Company to finally and fully settle its obligations to the Scheme Parties thereby significantly reducing the financial burden on the Company and alleviating pressures on the Company's cash flow.

5.17 The Hyflux board believes that the resolution of the Group's financial difficulties will provide a platform for the Group to stabilise its existing operations as well as pursue new business opportunities in the long term, for the benefit of its stakeholders.

5.18 Following the Restructuring, Hyflux will continue to operate across the entire water value chain (including developing, operating and owning water desalination plants, waste water treatment plants, etc.), which is its core area of expertise. It will pursue business opportunities along with the Investor to enhance shareholder and stakeholder value.

Disposal of the Tuaspring IWPP

5.19 The Tuaspring IWPP is an integrated water desalination and power plant. The Tuaspring IWPP was developed through Tuaspring and was funded through a combination of non-recourse project financing debt (with Maybank as the sole secured lender to Tuaspring), shareholder loans and equity from Hyflux. The shareholder loans and equity from Hyflux to Tuaspring were funded from the proceeds of the issuance of the S$400 million Preference Shares, two earlier issuances of perpetual capital securities totalling S$475 million and other corporate debt of Hyflux. For the purpose of redeeming these earlier issuances of perpetual capital securities, Hyflux subsequently raised the S$500 million Perpetual Capital Securities.

5.20 At the time of the project's development, the outlook for the Singapore power market was very favourable and the Tuaspring IWPP was projected to be profitable. The technical and financial viability of Tuaspring IWPP model was validated and approved by various parties, including regulators, professional advisors and project finance lenders.

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5.21 However, the subsequent oversupply of gas in the Singapore market led to depressed electricity prices in the wholesale market. This in turn resulted in significant losses for Tuaspring from electricity generation. In early 2017, after Tuaspring was operational, in line with its business model and asset light strategy, Hyflux embarked on a divestment exercise of the Tuaspring IWPP to improve the Group's liquidity. However, challenges arising from (i) the losses from the electricity generation, (ii) the lack of potential buyers' understanding of the market risks in the Singapore power market compared to other jurisdictions, as well as (iii) the prolonged process of obtaining offtaker approval for the prequalification of bidders to receive information, and conduct due diligence, on Tuaspring, resulted in a protracted sale process and difficulties in procuring and retaining bidders' interest in the divestment process.

5.22 Under the SMI Restructuring Agreement, it was contemplated that the Tuaspring IWPP would remain within the Group's portfolio, and that SMI's investment would in turn pave the way for the resolution of the Group's financial difficulties (including those associated with the Tuaspring IWPP). Alongside the restructuring efforts with SMI, the Group had also conducted a competitive bidding exercise for the divestment of the Tuaspring IWPP pursuant to an agreement to a collaborative consensual sale process with Maybank, the secured lender to Tuaspring (who holds security over the Tuaspring IWPP) ("Collaboration Agreement"), as well as working with PUB, the off-taker, and other interested parties to maximise the number of pre-qualified bidders for the Tuaspring IWPP. However, only a limited number of parties were eventually pre-qualified to receive the necessary information on the project, which limited the marketing of the Tuaspring IWPP divestment. Ultimately, of the two pre-qualified parties, only one proceeded to make a bid and that bid was subject to conditions which, even if met, would not have resulted in recovery sufficient to even repay Maybank's secured debt. The Group therefore focused its efforts on the completion of the investment contemplated under the SMI Restructuring Agreement.

5.23 On 5 March 2019, Tuaspring received a notice from the PUB, asserting that defaults under the WPA had occurred. The PUB notice stipulated that Tuaspring had 30 days from the date of the notice to remedy the alleged defaults (i.e. by 5 April 2019). A press release issued by PUB also on the same day stated that if Tuaspring failed to remedy the alleged defaults, PUB would exercise its right to terminate the WPA and take control of the desalination plant. Upon request for clarification from Tuaspring, PUB then informed Tuaspring that should it elect to purchase the desalination plant, it would be willing to waive any compensation sum that may be payable by Tuaspring to PUB pursuant to the WPA. PUB subsequently extended the cure period from 5 April 2019 to 30 April 2019, save that such extension would be immediately rescinded if inter alia approval for Hyflux's scheme of arrangement in respect of the SMI investment was not obtained at the meeting of its creditors on 5 April 2019.

5.24 Following the termination of the SMI Restructuring Agreement and the cancellation of the scheme meetings, on 17 April 2019, the PUB issued a notice of termination notifying Tuaspring that the previous extension of the cure period was rescinded on 5 April 2019, and provided for a 30 day notice period, at the end of which the WPA was terminated on 18 May 2019. Further, PUB elected to purchase the desalination plant of the Tuaspring IWPP pursuant to the provisions of the WPA.

5.25 Maybank has since terminated the Collaboration Agreement and appointed receivers and managers over the assets of Tuaspring (including the power plant), save for the desalination plant purchased by PUB. It is expected that the receivers and managers will conduct a sale process for the power plant and remaining assets not acquired by PUB and the proceeds, after the costs of the receivership, will go towards discharging the secured debt owed to Maybank. Any excess will only be received by Hyflux's creditors once the liabilities at Tuaspring are fully settled. In turn, such surplus (if any) will be need to be distributed to the Unsecured Scheme Parties first before any funds can be distributed to the P&P Scheme Parties. Given the challenges previously faced with procuring and retaining bidders' interest in the divestment process and that the only bid was not sufficient to repay Maybank's secured debt, the Group is of the view that there is unlikely to be any returns to Hyflux from its investment in Tuaspring. On 12

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March 2020, YTL Power International Berhad (“YTL”) released an announcement on the Malaysian stock exchange, Bursa Malaysia, that YTL and Taser Power Pte. Ltd. (“Taser”) have, on 12 March 2020, entered into a put and call option agreement with the receivers and managers of Tuaspring to acquire the Tuaspring power plant for a total purchase consideration of S$331.45 million. Completion of this put and call option agreement is conditional on, inter alia, approval of the Public Utilities Board of Singapore and the Energy Market Authority of Singapore, and completion of financing arrangements.

5.26 The disposal of the Tuaspring IWPP has nonetheless reduced the Group's working capital needs, which would have otherwise been significantly greater given the Tuaspring IWPP's significant funding needs for its operations, and the exclusion of such loss-making projects from the Group's portfolio have attracted investors that may have previously not been willing to continue funding such projects as part of their investment proposal.

TuasOne WTE Project

5.27 The TuasOne WTE Project is an ongoing project for the construction and development of the TuasOne waste-to-energy plant ("TuasOne WTE Plant"). In 2015, Hyflux and Mitsubishi Heavy Industries Limited ("MHIL") entered into a consortium agreement to prepare and submit a tender to the National Environment Agency ("NEA") to develop a waste-to-energy plant under a Design-Build-Own-Operate scheme. In connection with this tender, TuasOne Pte Ltd ("TuasOne") was incorporated with Hyflux and MHIL as shareholders (in the proportion of 75% and 25% respectively). TuasOne entered into a WTE services agreement with NEA to develop the TuasOne WTE Project, and to provide waste treatment services exclusively to NEA for 25 years. Hydrochem was engaged as the EPC contractor to the TuasOne WTE Project.

5.28 As a capital intensive project, the Group has been closely engaged with the MHIL Group and the lenders to TuasOne on a liquidity support plan that would allow for the TuasOne WTE Project to have sufficient funding until completion of the TuasOne WTE Plant. On 15 February 2019, the Group executed a definitive binding settlement agreement with the MHI Group, to resolve certain disputes between the Group and the MHI Group in respect of the TuasOne WTE Project, and address certain operational matters regarding the TuasOne WTE Project, so as to facilitate the cooperation of all parties working together to complete the TuasOne WTE Project.

5.29 The Group continued to engage the MHI Group and the TuasOne lenders on the terms of further drawdowns under the TuasOne facility, so as to ensure the availability of sufficient resources to complete the TuasOne WTE Project. As part of the discussions, parties had explored the possibility of novating the EPC contract to a MHI subsidiary for the purposes of completing the TuasOne WTE Project, to ensure the stability and completion of the TuasOne WTE Project. In turn, this would preserve value for Hyflux, as the value of its 75% shareholding in TuasOne is dependent on the TuasOne WTE Project being completed, and operating so as to receive payments from NEA as the off taker.

5.30 Following these negotiations, the Group and the MHI Group entered into the MHI Settlement Agreement on 26 December 2019, the terms of which include the novation of the TuasOne EPC contract from Hydrochem to MHIAP, a subsidiary of the MHI Group (the "TuasOne EPC Novation"). As at the date of the TuasOne EPC Novation, Hydrochem estimates that it has completed approximately 96.8% of the works for the TuasOne WTE Project. With the novation, the MHI Group will be responsible for the remaining 3.2% of the works. The MHI Settlement Agreement also provides for the

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release and discharge of claims, including those between the MHI Group on the one hand, and the Group on the other.11

5.31 In essence, the MHI Settlement Agreement provides for an overall settlement between the Group (including TuasOne), the MHI Group, and the lenders to the TuasOne WTE Project, which will ensure continued funding for the TuasOne WTE Project. The continued funding would, in turn, ensure completion of the TuasOne WTE Project, which is currently expected to be in January 2021, and the preservation of the Group's stake in the TuasOne WTE Project. The MHI Settlement Agreement resolves certain contingent liabilities and uncertainties and therefore creates more stable conditions for the Restructuring.

5.32 For the avoidance of doubt, the TuasOne EPC Novation will not affect the Company's shareholding nor stake in TuasOne, which will continue to undertake operations and maintenance for the TuasOne WTE Plant after it has reached commercial operations.

Tianjin Dagang Plant

5.33 The Group was engaged to develop, construct and provide operation and maintenance work for the Tianjin Dagang Plant, a 100,000 m³/day seawater desalination plant in Dagang City, Tianjin Province, PRC. To finance the development of the project, Hyflux's wholly owned subsidiary, Tianjin Dagang Newspring Co Ltd ("TJDG Newspring"), had on 11 March 2009 entered into the Tianjin Dagang Loan (a loan tenure of 15 years) with BOC.

5.34 As part of the ongoing efforts to restructure the Group's liabilities, Hyflux entered into negotiations with BOC to restructure the terms of the Tianjin Dagang Loan, and subsequently reached an extension plan of the Tianjin Dagang Loan. Pursuant to the extension plan, the maturity date of the Tianjin Dagang Loan has been extended by a further 3 years to 2026, with an adjusted repayment schedule reflecting lower annual repayments. BOC will also be provided with a pledge of the TJDG Plant, which is owned by TJDG Newspring. The extension plan is expected to ease pressure on TJDG Newspring's cash flow in the short to medium term.

PT Oasis

5.35 On 19 November 2018, the Group, through its wholly-owned subsidiary, Hyflux Consumer Products Pte. Ltd., disposed of its 150,000 shares in its Indonesian bottled drinking water business, PT Oasis. The disposal was at the book value of the asset, for a total consideration of S$32 million (subject to a compulsory withholding tax in Indonesia of 5%), and was made to Clivers Company Limited. This disposal provided some short-term liquidity to meet the Group's working capital needs.

6. Financial Position of the Hyflux, the Company, HMM and HE

6.1 As part of the orders issued by the Court in the 211B Proceedings, Hyflux, the Company, HMM and HE have been providing and continue to provide updates by regularly filing and publishing monthly management accounts of the applicants in the 211B Proceedings12.

11 More information on the MHI Settlement Agreement can be found from the announcements made

by Hyflux on SGXNet dated 26 December 2019 and 30 December 2019 which can be accessed at https://www2.sgx.com/securities/company-announcements. A copy of the MHI Settlement Agreement is set out under Appendix E of this Explanatory Statement.

12 These monthly management accounts are exhibited in the affidavits which can be accessed at: https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/

https://www2.sgx.com/securities/company-announcements

https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/

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6.2 The unaudited management accounts of Hyflux as at 31 January 2020 are set out below:

Statement of financial position

As at 31 Jan 2020

ASSETS S$'000

Subsidiary companies 164,554

Associates and joint ventures 23,682

Other investment 20,000

Trade and other receivables 7,637

Non-current assets 215,873


Cash and cash equivalents 4,020

Current assets 380,964

Total assets 596,837

LIABILITIES S$'000

Trade and other payables 199,839

Loans and borrowings 831,923

Tax payable 7,785

Current liabilities 1,039,547

Net current liabilities (658,583)


Non-current liabilities 16,475

Net liabilities (459,185)

Equity S$'000

Share Capital 607,258

Treasury Shares (85,929)

Perpetual Capital Securities 494,799

Reserves 37,337

Accumulated losses (1,512,650)

(459,185)

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6.3 The unaudited management accounts of the Company as at 31 January 2020 are set out below:


As at 31 Jan 2020

ASSETS S$'000

Property, plant and equipment 16,419

Intangible assets -

Subsidiaries 14,031

Deferred tax assets 63,901

Trade and other receivables -


Construction contract in progress 75,436

Inventories 735


Tax recoverable -



Total assets 283,972

LIABILITIES S$'000



Current liabilities 416,281





Equity S$'000

Share Capital 74,000

Reserves (1,255)

Accumulated losses (451,351)

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(378,606)

6.4 The unaudited management accounts of HMM as at 31 January 2020 are set out below.


As at 31 Jan 2020

ASSETS S$'000

Property, plant and equipment 16,745

Other investment 7,696


Construction contract in progress 209

Inventories 14,451




Total assets 43,873

LIABILITIES S$'000




62,932

66,450



Equity S$'000

Share Capital 1,000

Reserves (266,118)

(265,118)

6.5 The unaudited management accounts of HE as at 31 January 2020 are set out below:


As at 31 Jan 2020

ASSETS S$'000

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Property, plant and equipment 427

Subsidiaries 36,461

Deferred tax assets 375

Trade and other receivables -



Inventories 307



Total assets 44,092

LIABILITIES S$'000


Lease liability 4

Current tax payable 321



Loans from holding company 4,893

Lease Liability 7



Equity S$'000

Share Capital -

Capital reserves 378

Accumulated losses (60,167)

(59,790)

7. Rationale for the Scheme and potential alternatives

7.1 While the Group is currently facing financial difficulties, the Board believes that the Group has a viable business and will continue to trade as a going concern if its current financial obligations and liabilities are restructured and/or compromised and the contemplated Investment under the Restructuring Agreement is completed.

7.2 The Board believes that the Restructuring pursuant to the terms of the Restructuring Agreement and the proposed Scheme would benefit all stakeholders, including the Scheme Parties who would receive a greater return under the Scheme than under a

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winding up of the Company. In coming to this conclusion, the Board has taken into account the following considerations:

(a) It is anticipated that, under the terms of the Restructuring, the Scheme Parties will receive a substantially better return over time on the amount owed to them than they would do if the Company was placed into winding up, the liquidation of the Company being the expected outcome in the event that the Restructuring fails and is not implemented13. The Scheme Parties are directed to (i) a copy of the liquidation analysis prepared by Ernst & Young Solutions LLP ("EY") which can be found under Appendix G of this Explanatory Statement (the "EY Liquidation Analysis") and which sets out an estimate of what the Scheme Parties might obtain if the Company were to enter into liquidation following a failure of the Restructuring, and (ii) a copy of the estimated returns to Scheme Parties under the Scheme prepared by the Group and its advisors (the "Estimated Returns Analysis") which can be found under Appendix F of this Explanatory Statement.

(b) It is estimated that if the Company is placed into winding up, which the Board expects to be the case in the event that the Scheme does not become effective and the Restructuring does not complete, the Scheme Parties will not stand to recover from their Scheme Claims14.

(c) It is estimated that pursuant to the Restructuring (which requires the Scheme to be effective), the average estimated return for each General Claimant will be S$5,000 plus a recovery of approximately 8.5% to 20%15.

(d) The better outcomes referred to above will result from cash distributions to be made to Scheme Parties from the proceeds of the Proposed Investment.

(e) The approval of the Hyflux Scheme and the Subsidiary Schemes will enable a mutually beneficial restructuring of the Group's indebtedness, in order to achieve the following outcomes (as set out at paragraph 5.16 above):

(i) comprehensively restructure the Group's financial obligations. The Restructuring allows the Company to finally and fully settle its obligations to the Scheme Parties thereby significantly reducing the financial burden on the Company and alleviating pressures on the Company's cash flow; and

(ii) to enable the Group to seek fresh capital that is urgently required to sustain its ongoing businesses and infrastructure projects. In this regard, Hyflux has been pursuing potential strategic investments for the Group. In line with this business objective, the Restructuring will enable Hyflux to maximise the value of the Group entities (including the Company), and to ensure the long-term sustainability and competitiveness of the Group with a view to deliver value to its shareholders and other stakeholders.

(f) It is expected that the Group will emerge expeditiously from these proceedings having restructured the Group's financial obligations and finally and fully settled its obligations to the Scheme Parties. Given that the Scheme Parties will receive

13 Upon commencement of liquidation of Hyflux, being the ultimate holding company of the Group,

many of the other Group entities (including the Company) are also assumed to enter liquidation on or around the same time. Consequently, it is also assumed that construction activities on various projects of the Group would immediately cease.

14 The ranges presented in the EY Liquidation Analysis are illustrative only, based on certain assumptions made by the Group and EY and therefore the actual recoveries could be greater or less than those percentages.

15 The average estimated percentage returns per Scheme Party illustrated in the Estimated Returns Analysis are illustrative only, based on certain assumptions made by the Group and its advisors and therefore the actual recoveries could be greater or less than those percentages.

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a substantially better return over time on the amount owed to them than they would do if the Company was placed into winding up, the Group hopes that the Restructuring will enjoy support from the Scheme Parties. Hyflux accordingly considers that the Restructuring will effect a fair and commercial compromise and arrangement of the rights of the Scheme Parties and one which will enhance the financial position of the Group as well as that of Scheme Parties.

7.3 If the Restructuring is not completed by the Group within a reasonable timetable, given the cash flow issues facing the Group, the Group may face the possibility of no further extensions of the moratorium being granted under the 211B Proceedings and the creditors making demand and seeking recourse in the Court or elsewhere for unpaid amounts due and owing. The Board has concluded that it is necessary to pursue the Scheme in order to facilitate the Restructuring of the Group's overall indebtedness and to avoid winding-up of the Group. Hyflux has also been approached by two other investors. In particular, a proposal was made by a third party, Aqua Munda Pte Ltd ("Aqua Munda") to all senior creditors of Hyflux to purchase the debt that is owed to them by Hyflux. The offer was announced by Hyflux via SGXNet on 17 December 2019 pursuant to a request by Aqua Munda which subsequently furnished an information memorandum dated 27 December 2019. On 19 February 2020 Hyflux also received a letter from Longview International Holdings Ltd. ("Longview") expressing its interest in investing in Hyflux together with a joint venture partner, an undisclosed major Chinese entity. The Longview offer was announced by Hyflux via SGXNet on the same day. The terms of the proposed investment by Longview have not been made available to Hyflux. Given the uncertainty surrounding the Aqua Munda and Longview offers, as of the date of this Explanatory Statement, the Company believes that the proposed investment by the Investor is currently the only viable offer available to Hyflux.

7.4 Accordingly, the Board recommends that the Scheme Parties vote in favour of the Scheme to be proposed at the Scheme Meetings.

8. Rationale for classes of Scheme Parties

8.1 The law requires that Scheme Parties must be split into separate classes and a separate meeting (and vote) held for each class of Scheme Parties where Scheme Parties have rights which are so dissimilar as to make it impossible for them to consult together with a view to their common interest.

8.2 Having considered the existing rights of the Scheme Parties, and the way in which those rights will be compromised under the Scheme, and having taken legal advice, the Company considers that the Scheme Parties should be separated into the following three classes for the purposes of voting on each of the Schemes:

(a) the General Claimants comprise of the General Trade Claimants, who hold General Trade Claims, and the Other Claimants, who hold Other Claims;

(b) HMM which holds the HMM Claim; and

(c) the Subordinated Scheme Parties who hold Subordinated Scheme Claims.

8.3 Three separate classes are required as the rights of the General Claimants, HMM and the Subordinated Scheme Parties are sufficiently dissimilar from each other as to make it impossible for them to consult together with a view to their common interest for the following reasons:

(a) HMM ranks equally with the General Claimants in a liquidation, but is treated differently from the General Claimants under the Scheme, and should therefore be classified separately from the General Claimants; and

(b) the Subordinated Claims rank equally with the General Claimants in a liquidation, but are treated differently from the General Claimants under the Scheme (i.e. the Subordinated Claims are only given a nominal consideration of S$1 under the

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Scheme), and should therefore be classified separately from the General Claimants.

8.4 The Company considers that within each proposed class, the creditors' rights are not so dissimilar from each other as to make it impossible for them to consult together with a view to their common interest, given that the relative rights of the creditors within each class.

8.5 In light of the above, the Company will hold three Scheme Meetings; one at which the General Claimants will be invited to vote, one at which HMM will be invited to vote, and one at which the Subordinated Scheme Parties will be invited to vote.

9. Inter-conditionality of the Scheme, the Hyflux Scheme and the other Subsidiary Schemes

9.1 The continued effectiveness of the Scheme, the Hyflux Scheme and the other Subsidiary Schemes is interdependent so that if (i) the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes is not approved by the requisite majority of Scheme Parties (as defined under the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes, as applicable), (ii) a Court order sanctioning the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes is not obtained for the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes, or (iii) any Court order sanctioning the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes is not registered with ACRA, the Scheme, the Hyflux Scheme or any of the other Subsidiary Schemes will not become effective and the implementation of the Restructuring will not be possible.

10. Salient terms of the Scheme

Claims and approval process

10.1 The notices to file the relevant Proof of Claim required under the Act to participate in the Scheme Meetings and to receive payments under the Scheme were published on 9 January 2020, 5 February 2020 and 27 February 2020. The deadline to file Proofs of Claim was the Record Date (5:00 pm, 11 March 2020).

10.2 If you are a Scheme Party:

(a) You should have lodged a Proof of Claim by completing the relevant form provided at https://www.hyflux.com/financial-reorganisation-exercise/proof-of-claims/ in accordance with the instructions therein by the Record Date;

(b) Await adjudication of Proofs of Claim by the Chairman of the Scheme Meetings. The results will be announced by 25 March 2020;

(c) If you wish to, you may request to inspect the Proofs of Claim filed by other Scheme Parties by 2 April 2020. To do so, you must send such request in writing to the Chairman and a written notice of the request to the Company. The Company shall forward the same to the affected Scheme Party/Parties.

(i) within 3 days of receiving any such request, the party whose Proof of Claim is sought to be inspected will inform you if he or she objects to your request;

(ii) where the party objects, you can send a written notice within 3 days of receiving the response to: (i) ask for agreement on appointment of an Independent Assessor to decide on the issue of whether the Proof of Claim will be allowed to be inspected; or (ii) apply to Court for the appointment of an Independent Assessor where no such agreement is arrived at. In such written notice or application, you must nominate an Independent Assessor and state the dispute that the Independent Assessor (if appointed) is to decide on;

https://www.hyflux.com/financial-reorganisation-exercise/proof-of-claims/

https://www.hyflux.com/financial-reorganisation-exercise/proof-of-claims/

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(iii) After the Independent Assessor is appointed, the Chairman must provide the relevant Proof of Claim to him or her as soon as practicable. The Independent Assessor must, not later than 7 days after being provided with the relevant proof of claim: (i) make a decision on the dispute, and (ii) send a written notice of the decision along with reasons to the Chairman, the Company, and the parties involved in the dispute.

(d) If you wish to, you may object to the Chairman's adjudication of your Proof of Claim or another Scheme Party's Proof of Claim at a time no later than 9 April 2020.

(i) If there is any such objection, you may: (i) write to the Company, the Chairman and the Scheme Party whose Proof of Claim will be affected (if applicable) to ask for agreement on appointment of an Independent Assessor; or (ii) apply to Court for the appointment an Independent Assessor by the Court under the Act where no such agreement is arrived at. In such written notice or application, you must nominate an Independent Assessor and state the dispute that the Independent Assessor (if appointed) is to decide on.

(ii) After the appointment of an Independent Assessor, the Chairman will provide as soon as practicable the relevant Proof of Claim to the Independent Assessor.

(iii) After the Independent Assessor has been provided the Proof of Claim, he must, not later than 7 days after the Chairman provides him the Proof of Claim: (i) make a decision on the dispute, and (ii) send a written notice of the decision along with reasons to the Chairman, the Company, and the parties involved in the dispute.

(e) On the day of the Scheme Meetings, the Chairman will provide each Scheme Party with a copy of the updated list of Scheme Parties with Accepted Scheme Claims.

10.3 All Accepted Claims will be determined as at the Record Date. Any alleged Scheme Claim(s) not denominated in Singapore dollars (S$) shall be converted to its value in Singapore dollars (S$) using the Base Currency Conversion Rate.

10.4 The Company will send in writing the results of the adjudication to every Scheme Party who has filed a Proof of Claim.

Excluded Claims and other claims not subject to the Scheme

10.5 For the purposes of the Scheme, the following Claims are Excluded Claims that will not be affected by the Scheme:

(a) Any Claim arising under or in respect of the Facilities, which are to be compromised under the scheme of arrangement which has been proposed by Hyflux.

(b) Any Claim arising under or in respect of the finance documents and the project documents in relation to the TuasOne Facility and any Claim arising under or in respect of the agreements set out in paragraph (c)(i) to (c)(vi) of the definition of "Excluded Claim" in the Scheme.

(c) Any Claim arising under or in respect of the KfW Facility, which is to be compromised under the scheme of arrangement which has been proposed by Hyflux.

(d) Any Claim arising under or in respect of the MHI Settlement Agreement. The MHI Settlement Agreement is an overall settlement between the Group and the MHI Group, and which will allow for the TuasOne WTE Project to be completed,

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and for the Group and the MHI Group to settle all disputes between them in respect of the TuasOne WTE Project.

(e) Any Claim arising under or in respect of the QDC EPC Contract, which is contemplated to be completed and in respect of which there remain ongoing negotiations with the lenders in relation to the QDC EPC Contract for the purpose of allowing the Qurayyat IWP to meet the requirements of the offtaker, but only to the extent any such Claim cannot by law be extinguished, waived or compromised or no longer be a Liability of the Company under the Scheme.

(f) Any Claim arising under or in respect of the matters set out in paragraph (g) to (i), (l) and (m) of the definition of "Excluded Claim" in the Scheme, which are contingent Liabilities arising from bonds and guarantees that must be maintained if the Group is to continue its EPC business.

(g) Any Claim of HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust) Limited arising under or in respect of the leases dated 4 April 2005 and 15 February 2017.

(h) Any Claim which is not as at 22 May 2018 a legally valid and binding debt of a definite amount then actually due from the Company, save for Claims set out in Schedule 2 of the Scheme. Claims that arise after 22 May 2018 (other than those set out in Schedule 2 of the Scheme) relate to critical payments of the Company which the Company intends to pay in full.

10.6 Further, creditors with claims of monetary value less than or equal to S$5,000 will not be captured under the Scheme. The Company will separately determine the quantum such claim outside of the Scheme, and settle such claim in full by no later than the Settlement Date.

10.7 Also, sub-suppliers with claims in relation to the Khurais Seawater Reverse Osmosis Plant project should also note that they will not be entitled to participate in and/or receive entitlements under the Scheme in respect of such claims, as these claims will be settled by Saipem pursuant to an agreement dated 30 January 2019 between the Company, HMM, Hydrochem Saudi Limited and Saipem.

Schemes Effectiveness

10.8 The Scheme shall become effective on the Schemes Effective Date, being the date on which the latest of the Scheme Effective Date, the Hyflux Scheme Effective Date, the HE Scheme Effective Date and the HMM Scheme Effective Date occurs (i.e. the date on which the latest Court order sanctioning the Scheme, the Hyflux Scheme, the HE Scheme and the HMM Scheme (after it has been approved by the relevant scheme parties) is registered with ACRA. The Company will notify the Scheme Parties via an announcement made on SGXNet that the Schemes Effective Date has occurred.

10.9 As described in more detail in paragraph 11, the Scheme will, from the Schemes Effective Date, grant authority to the Scheme Manager to accede to the Implementation Deed (in its capacity as the Scheme Manager and on behalf of the Scheme Parties) and to execute certain other documents required to implement the Restructuring Steps contemplated by and in connection with the Scheme and the Implementation Deed (such documents being the "Restructuring Documents") to take effect in accordance with the terms of the Implementation Deed.

Completion, Restructuring Effective Date and Settlement Date

10.10 The continued effectiveness of the Scheme is contingent upon (and the Settlement Date will be determined by) (i) Completion Date under the Restructuring Agreement, and (ii) Restructuring Effective Date occurring under and in accordance with the Implementation Deed. This is in turn contingent upon the satisfaction or waiver of the Conditions Precedent under the Implementation Deed (including the conditions precedent under the Restructuring Agreement), including but not limited to:

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(a) the approval by the SGX-ST for the listing and quotation of the New Shares to be issued by Hyflux to the Investor;

(b) the Investor obtaining the necessary whitewash waiver from the Securities Industries Council

(c) the approval by Hyflux's shareholders at an extraordinary general meeting of Hyflux for the allotment and issue of the New Shares to be issued Hyflux to the Investor and for the waiver of their right to receive a general offer pursuant to Rule 14 of the Singapore Code on Take-overs and Mergers arising from the Proposed Investment; and

(d) Hyflux obtaining the necessary approval, consent and waiver from the National Environment Agency in respect of the TuasOne WTE Project.

10.11 The Restructuring Steps to take effect on the Restructuring Effective Date shall take effect in accordance with the steps set out in the Implementation Deed.

10.12 If: (i) the Restructuring Effective Date does not occur on or before the Long-Stop Date, or (ii) the Restructuring Agreement terminates in accordance with its terms prior to the Restructuring Effective Date, regardless of the Scheme having become effective on the Scheme Effective Date, the Scheme will be terminated and the compromise and arrangements thereunder shall be of no effect and shall be construed as if it had never become effective.

10.13 The Scheme Parties will be notified via an announcement made on SGXNet that the Completion Date and the Restructuring Effective Date have occurred.

10.14 The Settlement Date will occur on the date falling 7 Business Days after the Restructuring Effective Date.

10.15 The Scheme Parties will be notified via an announcement made on SGXNet that the Settlement Date has occurred.

Cash consideration under Scheme

10.16 Pursuant to discussions with the Investor, S$10 million of the Investment Amount has been allocated as at the Restructuring Effective Date to satisfy all claims against the Company, HE and HMM. This amount has been allocated between the three entities based on an evaluation of the liquidation analysis to allow recovery, at the first payout date, of at least as much as the high case in the liquidation scenario. Of this S$10 million, approximately S$4.45 million has been allocated to the Company for the purpose of the Scheme (being the amount equal to the Base General Claims Cash Consideration).

10.17 Further, pursuant to the terms of the TuasOne EPC Contract and the MHI Settlement Agreement, the Company will receive a Trade Creditors' Payment, of which (i) 32.65% will be utilised for settlement of the Accepted General Claims (i.e. the Additional General Claims Cash Consideration); and (ii) 17.35% will be paid to HMM for settlement of claims under the HMM Scheme (i.e. the HMM Claim Cash Consideration).

10.18 Each Subordinated Scheme Party will receive a nominal sum of S$1 for its Subordinated Claim.

Cash distribution under Scheme

10.19 Payments under the Scheme are expected to be as follows:

(a) Payment of S$1 to each Subordinated Scheme Party;

(b) Distribution of the Base General Claims Cash Consideration of S$4.45 million to all General Claimants on the Settlement Date in the following manner:

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(i) payment of S$5,000 each to all General Claimants with Accepted General Claims;

(ii) a pro rata distribution of the remaining amount after payment under paragraph 10.19(b)(i) (i.e. the Initial General Claim Cash Payout) to all General Claimants with Accepted General Claims based on the value of their respective Accepted General Claim (after deducting S$5,000 from such value).

(c) Distribution of the Trade Creditors' Payment within 28 days of the Company receiving the same in the following manner:

(i) a pro rata distribution of the Additional General Claims Cash Consideration (i.e. the Final General Claims Cash Consideration) to all General Claimants with Accepted General Claims based on the value of each Accepted General Claim (after deducting S$5,000 from such value); and

(ii) Distribution of the HMM Claim Cash Consideration to HMM.

10.20 The last day for any distributions to be made under the Scheme is the Distribution Expiry Date, i.e., the date falling 2 ½ years after the Restructuring Effective Date. Upon the Distribution Expiry Date, Scheme Parties shall no longer be entitled to any distributions under the Scheme, even if there remain certain distributions that have not been made by the Distribution Expiry Date. For example, if the Company does not receive the Trade Creditors' Payment prior to the expiry of the Distribution Expiry Date, then General Claimants will no longer be entitled to the payout to be made upon receipt of the Trade Creditors' Payment.

Discharge and Extinguishment of Scheme Claims

10.21 On the Restructuring Effective Date, each Scheme Party shall give the undertakings, releases and waivers as set out in Clause 5 of the proposed Scheme.

10.22 For the avoidance of doubt, the undertakings, releases and waivers set out in Clause 5 of the Scheme do not apply to Excluded Claims.

Remuneration of Scheme Manager

10.23 The Scheme Manager shall be remunerated according to what is fair, reasonable and adequate given the Scheme Manager's roles and responsibilities set out in the scheme and prevailing market conditions. Based on the structure of the scheme, it is envisaged that the work to be done can broadly be divided into work that is: (i) complex and requires considerable expertise or judgment; and (ii) time-intensive but generally less complex.

10.24 The first category (work involving considerable "value contribution"), includes the adjudication of proofs, conduct of the scheme meetings, attending to queries from Scheme Parties, re-basing and calculation of distributions under the Scheme (other than the initial distribution that is to be made on the Settlement Date), dealing with surplus amounts, addressing challenges to the Scheme Manager's decisions and the assessment of liabilities that crystallise and liabilities that are extinguished save in obvious situations. All disputes, court proceedings and matters involving an independent assessor as provided for under the Proof Regulations will be part of this category.

10.25 This category of work will be remunerated on a time–incurred basis using standard hourly rates and handled by a team staffed at appropriate levels of seniority.

10.26 The second category of work involves more time spent especially in light of the varied nature of the obligations being schemed and the large number of Scheme Parties. This category includes administrative tasks, co-ordination of logistics and reconciling of documents and verification of data. This category also includes other tasks which do

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require more judgment to be exercised in addition to considerable man-hours such as the preparing of the various lists of creditors and the corresponding amounts that have been claimed, admitted and/or rejected, the review of supporting documents from Scheme Parties against the company's records and following up on further documents and information required, computation and work associated with the initial distribution on the Settlement Date, computing the various cash payouts under the Scheme, and the facilitating of requests for inspection of Proofs of Claim.

10.27 This category of work will similarly be remunerated on a time–incurred basis using standard hourly rates and handled by a team staffed at appropriate levels of seniority but a discount will be applied on the total fees incurred.

Modifications

10.28 The Scheme contains provisions allowing the Company to, prior to the calling of any Scheme Meeting, delete, modify, amend or add to the terms of the Scheme which the Company (upon further consultation with Scheme Parties as necessary or relevant) may think fit or appropriate for the implementation of the Restructuring.

10.29 The Scheme also contains provision for the Company, at any Court hearing to sanction the Scheme, to consent on behalf of itself and all Scheme Parties to any modification of, or addition to, or to any condition to the Scheme which the Court may think fit to approve or impose which is necessary for the implementation of the Restructuring. The Court would be unlikely to approve any modification of, or addition to, or impose a condition to, the Scheme which might be material to the interests of the Scheme Parties unless Scheme Parties were informed of such modification, addition, or condition. It would be for the Court to decide, in its discretion, whether or not a further meeting of Scheme Parties should be held in those circumstances.

10.30 The Scheme Manager may at any time convene Eligible Scheme Parties' Meeting(s) to consider any amendments to the Scheme that are procedural in nature, provided that such amendments do not have an adverse effect on any of the Scheme Parties and/or their rights under the Scheme.

Releases

10.31 The terms of the Scheme also release the Company and any other member of the Group (including their respective Personnel (including current and former officers and directors) and Affiliates) from any claims in relation to or arising out of or in connection with:

(a) any liability in respect of the preparation, negotiation, sanctioning or implementation of the Scheme and/or the Restructuring; and

(b) any liability arising under or in connection with any Scheme Claims, save for any claims in relation to or arising out of or in connection with any entitlements to Scheme Consideration.

11. Implementation of the Restructuring

11.1 The Restructuring will be implemented pursuant to the terms of the Restructuring Documents and, in particular, the Implementation Deed which is to be entered into between amongst others, the Investor, the Investment SPV, Hyflux and the Company. Pursuant to the Scheme, the Scheme Manager will be authorised to, amongst other things, accede as a party to the Implementation Deed on behalf of the Scheme Parties and take such steps or actions as are reasonably necessary or desirable to give effect to the terms, or otherwise implement the transactions contemplated by the Implementation Deed and the Restructuring Documents. The Scheme Manager shall accede to the Implementation Deed as soon as practicable after the Scheme Effective Date and shall become bound by the terms of the Implementation Deed in its capacity as the Scheme Manager and on behalf of the Scheme Parties.

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11.2 Under the Implementation Deed, the Restructuring steps to be completed will commence on the Business Day after all of the Conditions Precedent have been satisfied (or waived) and a notice confirming satisfaction of the Conditions Precedent has been issued by Hyflux. The Restructuring Steps shall include the implementation of the terms of the Scheme, the Restructuring Agreement, and shall also include the release of all of the Scheme Claims.

11.3 The steps to occur pursuant to the Implementation Deed include:

(a) As soon as possible after the Scheme Effective Date, the Scheme Manager will sign each Restructuring Document to which it is expressed to be a party on its own behalf and on behalf of the Scheme Parties who are expressed to be a party to them (acting as their attorney and agent pursuant to the terms of the Scheme).

(b) On the date on which Hyflux has received documents and/or seen evidence in form and substance satisfactory to it to satisfy the Conditions Precedent, Hyflux will issue a notice confirming satisfaction of Conditions Precedent. Issuing of the notice will trigger a "Restructuring Commencement Time" which is the time on which the "Completion Date" (as defined in the Restructuring Agreement) will take effect and the Restructuring Steps will take place in the order set out in the Implementation Deed. The Restructuring Steps are inter-conditional. To the extent that any of the steps are not completed on the Restructuring Effective Date, each of the steps will be deemed not to have become effective and will be unwound to the extent legally possible.

(c) Immediately upon the occurrence of the Restructuring Commencement Time, the Investor shall irrevocably pay the Completion Amount and the Additional Completion Amount to Hyflux and/or the Escrow Agent. Subject to the previous agreement between Hyflux and the Investor, the Bank Guarantee will either be called upon or the Investor will pay the Deposit Amount in cash.

(d) Certain Restructuring Documents will be released (in the order set out below but subject to the inter-conditionality described above):

(i) the Working Capital Line Facility Agreement;

(ii) the documents required to allot T1 Shares to the Investor and the Co-Investors;

(iii) other documents required to be delivered by Hyflux to the Investor pursuant to the terms of the Restructuring Agreement;

(iv) the documents required to appoint New Directors to the Board of Hyflux;

(v) the Instruction Letters, the New Security Documents, the New Finance Documents (each as defined in the Implementation Deed) and the Escrow Agreement; and

(vi) the Release Documents (as defined in the Implementation Deed).

(e) Immediately following the release of the Release Documents, the releases contained in clause 5 of the Scheme shall take effect and accordingly all of the rights, title and interests of the Scheme Parties to and in the Scheme Claims shall be discharged and released (save for any claims in relation to or arising out of or in connection with any entitlements to Scheme Consideration).

11.4 Immediately upon the completion of the final Restructuring Step, Hyflux will deliver the Restructuring Completion Notice and will make an announcement on SGXNet that the Completion Date and Restructuring Effective Date have occurred.

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11.5 On or before the Settlement Date, which is due to occur 7 Business Days after Restructuring Effective Date, the following steps will take effect:

(a) the Company and/or the Scheme Manager shall make or procure the Escrow Agent to make the payments, allocations and distributions described at paragraphs 10.19 above; and

(b) the Company and/or the Scheme Manager shall make or procure the Escrow Agent to make the payments, allocations and distributions in accordance with the terms of the Subsidiary Schemes and other payments as described in the Implementation Deed,

or in each case, procure that such payments are irrevocably instructed.

11.6 Immediately upon completion of the steps described at paragraph 11.5 above, the Scheme Manager will deliver the Settlement Date Steps Completion Notice and Hyflux will make an announcement on SGXNet that the Settlement Date occurred.

11.7 The Implementation Deed will be substantially in the form distributed to the Scheme Parties prior to the Scheme Meetings.

12. Interests of Directors

12.1 Section 211(1) of the Act requires that this Explanatory Statement discloses any material interests of the directors of the Company, whether as directors or as members, creditors or holders of units of shares of the Company or otherwise, and the effect thereon of the compromise or arrangement in so far as it is different from the effect on the like interests of other persons.

12.2 The Company is not aware of any relevant interests of its directors as at the date of this Explanatory Statement.

13. Risk Factors

13.1 In considering whether to vote in favour of the Scheme, each Scheme Party should carefully consider all of the information contained in this Explanatory Statement and in particular the risk factors described below, which are not exhaustive. There may be other risks other than that highlighted below, and Scheme Parties should also consider all other risks relevant in the circumstances.

13.2 Risk of Scheme not being sanctioned by the Singapore Court: Even if the required majority of votes is secured from Scheme Parties in support of the Scheme (which cannot be assured) at the Scheme Meetings, the Scheme is still subject to the approval of the Court. The Court will not sanction the Scheme unless the Court is satisfied, among other things, that the relevant provisions of the Act have been complied with and that the Scheme is fair and reasonable (i.e. an intelligent and honest person, a member of the class concerned and acting in respect of his or her own interest, might reasonably approve the scheme of arrangement (see above at paragraph 2.4)). There can be no assurance as to the Court's decision in this regard.

13.3 Risk of the Scheme being objected to: Even if the Scheme is approved at the Scheme Meetings, it is possible for a person with an interest in the Scheme (whether a Scheme Party or otherwise) to object to the scheme. They may attend or be represented at the Court sanction hearing in order to make representations that the Scheme should not be approved and to appeal against the granting of the Court order sanctioning the Scheme. Therefore, it is possible that objections will be made at or before the sanction hearing or that an appeal will be made against the granting of the Court order sanctioning the Scheme and that any such objections or appeal will delay or prevent the Restructuring.

13.4 Risk of Hyflux Scheme and other Subsidiary Schemes not being approved by the requisite majority of creditors: Even if the Scheme is approved by the requisite

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majorities of Scheme Parties, the effectiveness of the Scheme is inter-conditional with the effectiveness of the Hyflux Scheme as well as the other Subsidiary Schemes (see paragraph 9 above). The effectiveness of the Hyflux Scheme as well as the other Subsidiary Schemes is contingent on (i) the Subsidiary Schemes being approved by the requisite majority of Scheme Parties (as defined under the Hyflux Scheme and each other Subsidiary Scheme), (ii) the Court sanctioning the Hyflux Scheme and each other Subsidiary Scheme at the relevant Court sanction hearing, and (iii) any Court order sanctioning the Hyflux Scheme and the other Subsidiary Schemes being registered with ACRA.

13.5 Risk of Scheme Meetings not being completed on the timeline envisaged in this Explanatory Statement: Factors unknown to the Company at the date of this Explanatory Statement may result in delays to the completion of the Restructuring.

13.6 Risk of not receiving the necessary approval from Hyflux's shareholders: Even if the Scheme is sanctioned by the Court, its effectiveness is nonetheless contingent on, among other things: (i) the approval by the SGX-ST for the listing and quotation of the New Shares to be issued by Hyflux to the Investor, (ii) the Investor obtaining the necessary whitewash waiver from the Securities Industries Council and (iii) the approval by Hyflux's shareholders at an extraordinary general meeting of Hyflux for the allotment and issue of the New Shares to be issued by Hyflux to the Investor and for the waiver of their right to receive a general offer pursuant to Rule 14 of the Singapore Code on Take-overs and Mergers arising from the Proposed Investment (see above at paragraph 10.10).

13.7 Risk of the Restructuring not being completed before the Group runs out of cash: Even if the required majority of votes is secured from Scheme Parties in support of the Scheme at the Scheme Meetings, the Restructuring may not be completed before the Group runs out of cash. Absent an unexpected deterioration in market conditions, the Group should not run out of cash prior to the date it is expected that the Scheme will become effective. However, if the Restructuring is not completed by the end of 2020, the board of one or more of the Group companies may determine that the Restructuring is no longer feasible and that they have no option but to take steps to place that company into some other form of insolvency proceedings.

13.8 Risk of the conditions to completion of the Restructuring not being fulfilled: Even if the Scheme is approved by the requisite majorities of Scheme Parties and the Scheme Effective Date occurs, in order for the Restructuring to be implemented there are other conditions that need to be fulfilled for Completion under the Restructuring Agreement and Restructuring Effective Date to occur (see above at paragraph 10.10). If the Scheme does not become effective and/or the Conditions Precedent are not satisfied or waived, the Restructuring Effective Date will not occur and the Restructuring will not take effect. If the Restructuring does not occur, the Group will not benefit from the restructuring of the debt and the injection of funds pursuant to the Proposed Investment and the Group companies would be very likely to enter into insolvency processes which would result in a severe risk to creditors' returns.

13.9 Risk of the Restructuring Agreement terminating: Even if the Scheme is approved by the requisite majorities of Scheme Parties, in order for the Restructuring to be implemented the Restructuring Effective Date must occur on or prior to the Long-Stop Date. If the Restructuring Effective Date does not occur on or prior to the Long-Stop Date, the Restructuring Agreement will terminate. The Restructuring Agreement may also terminate in accordance with its terms prior to the Restructuring Effective Date in which case the Restructuring will not take effect (see above at paragraph 10.11).

13.10 Risk of the Proposed Investment not materialising: The Investor and the Investment SPV are entities independent of the Company and the Group and neither the Group nor the Company have been able to assess the financial standing of the Investor or the Investment SPV. Factors unknown to the Company or the Group as of the date of this Explanatory Statement may result in the Proposed Investment not materialising.

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Appendix A – Definitions

1. DEFINITIONS AND INTERPRETATION

1.1 In this Explanatory Statement, unless inconsistent with the subject or context, the following expressions shall have the following meanings:

"211B Proceedings" means the applications for a moratorium under Section 211B(1) of the Act filed by each of Hyflux, HE, HMM and the Company, vide HC/OS 633/2018, HC/OS 634/2018, HC/OS 636/2018 and HC/OS 638/2018, respectively, and all associated proceedings therein.

"Accepted" means, in relation to a Scheme Claim, the acceptance by the Chairman of such Claim (or part thereof) for the purposes of determining entitlement to attend and vote at the Scheme Meetings without dispute or, where applicable, the acceptance or determination by the Independent Assessor of such Claim (or part thereof) for such purpose in accordance with the Proof Regulations.

"ACRA" means the Accounting and Corporate Regulatory Authority of Singapore.

"Act" means the Companies Act, Chapter 50 of Singapore.

"Additional General Claims Cash Consideration" means 32.65% of the Trade Creditors’ Payment.

"Affiliates" means, in relation to any person, its current and former direct and indirect Subsidiaries, subsidiary undertakings, parent companies, holding companies, partners, equity holders, members and managing members, affiliated partnerships and any of their respective Affiliates.

"Base Currency Conversion Rate" means the conversion rate of any foreign currency denomination to Singapore dollars (S$) as published in The Business Times on the Record Date, or, if not published in The Business Times on the Record Date, the applicable foreign currency rate which appears on the Currency Converter webpage of the OANDA Corporation’s website at <https://www.oanda.com/currency/converter/> on the Record Date.

"Base General Claims Cash Consideration" means cash of an amount equal to S$4,450,000.

"Business Day" means a day (excluding Fridays, Saturdays, Sundays and gazetted public holidays) on which commercial banks are open for business in Singapore and the Emirates of Ras al Khaimah.

"Chairman" means the chairman of the Scheme Meetings appointed pursuant to Section 211F(5) of the Act.

"Claim" means any Liability of the Company of a monetary value of more than S$5,000, together with any of the following matters relating to or arising in respect of such Liability:

(a) any refinancing, novation, deferral or extension;

(b) any claim for breach of guarantee, representation, warranty and/or undertaking or an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other Liability falling within this definition;

(c) any claim for damages or restitution; or

https://www.oanda.com/currency/converter/

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(d) any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings.

"Company" means Hydrochem (S) Pte Ltd, a company incorporated in Singapore with registration number 198902670Z, whose registered office is located at 80 Bendemeer Road, Singapore 339949.

"Conditions Precedent" means the "Conditions Precedent" as defined in the Implementation Deed.

"Constitutional Documents" means the Memorandum and Articles of Association and any other constituent documents of the Company.

"Court" means the High Court of Singapore.

"Distribution Expiry Date" means the date falling two (2) years and six (6) months after the Restructuring Effective Date.

"Escrow Account" means the escrow account maintained with the Escrow Agent in accordance with the terms of the Hyflux Scheme.

"Escrow Agent" means an agent to be appointed by the Company for the purposes of managing the Escrow Account in accordance with the terms of the Hyflux Scheme.

"Excluded Claim" means:

(a) the HMM Excluded Claim;

(b) any Claim arising under or in respect of the Facilities;

(c) any Claim arising under or in respect of each Finance Document (as defined in the TuasOne Facility) and each Project Document (as defined in the TuasOne Facility), and any Claim arising under or in respect of the following agreements:

(i) Agreement on Post-Default withdrawals from Disbursement Account and GST Account dated 12 March 2019;

(ii) Post-Default Withdrawals Termination Agreement dated 27 December 2019;

(iii) Declaration of Trust Over Account dated 12 March 2019;

(iv) Deed of Termination of Trust Over Account dated 27 December 2019;

(v) Hydrochem Account Agreement dated 12 March 2019; and

(vi) Hydrochem Account Termination Agreement dated 27 December 2019.

(d) any Claim arising under or in respect of the KfW Facility;

(e) any Claim arising under or in respect of the MHI Settlement Agreement;

(f) any Claim arising under on in respect of the QDC EPC Contract;

(g) any Claim of Arab Banking Corporation BSC arising under or in respect of Counter Guarantee No ILG/11/20000, Counter Guarantee No ILG/15/20066, Counter Guarantee No ILG/16/20073, Counter Guarantee No ILG/16/20075 and/or Counter Guarantee No ILG/16/20119;

(h) any Claim of BNP Paribas, Singapore Branch, arising under or in respect of Performance Guarantee No GRE09/0137 and Counter Guarantee No 00050IGG0901976;

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(i) any Claim of DBS Bank Ltd arising under or in respect of Banker’s Guarantee No 550-02-0864917 and/or any Security Bonds for Foreign Workers (Domestic and non-Domestic) issued by the Company pursuant to the Employment of Foreign Manpower Act (Chapter 91A);

(j) any Claim of HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust) Limited arising under or in respect of the lease dated 4 April 2005 entered into between (i) HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust) and (ii) the Company;

(k) any Claim of HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust) Limited arising under or in respect of the lease dated 15 February 2017 entered into between (i) HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust), (ii) Hyflux Innovation Centre Pte Ltd and (iii) the Company;

(l) any Claim of Mizuho Bank Ltd, Singapore Branch arising under or in respect of Banker’s Guarantee No LOD-GTO-009479 and/or Banker’s Guarantee No LOD-GTO-009459;

(m) any Claim of Oversea-Chinese Banking Corporation Limited in respect of Banker’s Guarantee No. LG5TF82006842; or

(n) any Claim which is not as at 22 May 2018 a legally valid and binding debt of a definite amount then actually due from the Company, save for Claims set out in Schedule 2.

“Facilities” means the "Facilities" under and as defined in the Hyflux Scheme.

"Final Distribution Date" means the date on which all Scheme Consideration shall have been issued and/or distributed (as applicable) to the Scheme Parties.

"Final General Claim Cash Payout" means in respect of each Accepted General Claim, a cash payout to be calculated in the following manner:

𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 =𝑎𝑎 − 𝑆𝑆$5,000

𝑐𝑐 − 𝑆𝑆$5,000 × 𝑝𝑝 × 𝐴𝐴𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹

where:

a is the value of the subject Accepted General Claim;

c is the total value of all Accepted General Claims;

p is the total number of General Claimants with Accepted General Claims;

AGCCC is the Additional General Claims Cash Consideration; and

FGCCP is the Final General Claim Cash Payout for the subject Accepted General Claim, to be rounded down to the nearest cent.

"General Claim" means the aggregate value of any Claim(s) of a General Trade Claimant or an Other Claimant.

"General Claimants" means the General Trade Claimants and the Other Claimants.

"General Claims Cash Consideration" means the Additional General Claims Cash Consideration and the Base General Claims Cash Consideration to be distributed in the manner set out in Clause 4 of the Scheme.

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"General Trade Claim" means the aggregate value of any Claim(s) of a General Trade Claimant that is not an Excluded Claim.

"General Trade Claimant" means any and each of the parties as set out in Schedule 1 of the Scheme, and as supplemented, amended and restated from time to time.

"Group" means Hyflux and its Subsidiaries.

“HE” means Hyflux Engineering Pte Ltd, a company incorporated in Singapore with registration number 200009792D whose registered office is located at 80 Bendemeer Road, Singapore 339949.

"HE Scheme" means the scheme of arrangement proposed by HE under Section 210 of the Act in its present form or with or subject to any modifications, additions or conditions approved or imposed by the Court or approved in accordance with its terms.

“HE Scheme Effective Date” means the date on which the Court order sanctioning the HE Scheme under the Act is lodged with ACRA.

“HMM” means Hyflux Membrane Manufacturing (S) Pte Ltd, a company incorporated in Singapore with registration number 200702494M whose registered office is located at 80 Bendemeer Road, Singapore 339949.

"HMM Claim" means the aggregate value of the Claim by HMM against the Company arising under or in respect of the provision of goods and services for the purposes of the TuasOne WTE Project as reflected under the purchase orders raised by the Company to HMM dated 7 September 2017 and 8 February 2018.

“HMM Excluded Claim” means the aggregate value of the Claim by HMM against the Company arising under or in respect of the provision of goods and services for the purposes of the TuasOne WTE Project, which will be settled in accordance with the terms of the deed of release entered into between the Company and HMM dated 16 March 2020.

"HMM Claim Cash Consideration" means 17.35% of the Trade Creditors’ Payment.

"HMM Scheme" means the scheme of arrangement proposed by HMM under Section 210 of the Act in its present form or with or subject to any modifications, additions or conditions approved or imposed by the Court or approved in accordance with its terms.

“HMM Scheme Effective Date” means the date on which the Court order sanctioning the HMM Scheme under the Act is lodged with ACRA.

"Holding Period" means the period commencing on and from the Restructuring Effective Date and ending on the date falling six (6) months after the Final Distribution Date.

"Hyflux" means Hyflux Ltd, a company incorporated in Singapore with registration number 200002722Z, whose registered office is located at 80 Bendemeer Road, Singapore 339949.

"Hyflux Scheme" means the scheme of arrangement proposed by Hyflux under Section 210 of the Act in its present form or with or subject to any modifications, additions or conditions approved or imposed by the Court or approved in accordance with its terms.

" Hyflux Scheme Effective Date” means the date on which the Court order sanctioning the Hyflux Scheme under the Act is lodged with ACRA.

"Implementation Deed" means the implementation deed to be entered into between, among others, Hyflux, HMM, HE, the Company and the Investor.

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"Independent Assessor" means an independent assessor appointed in accordance with the Proof Regulations.

"Initial General Claim Cash Payout" means in respect of each Accepted General Claim, a cash payout to be calculated in the following manner:

𝐼𝐼𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 = 𝑆𝑆$5,000 + �𝑎𝑎 − 𝑆𝑆$5,000

𝑐𝑐 − 𝑆𝑆$5,000 × 𝑝𝑝× (𝐵𝐵𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 − 𝑆𝑆$5,000 × 𝑝𝑝)�

where:

a is the value of the subject Accepted General Claim;

c is the total value of all Accepted General Claims;

p is the total number of General Claimants with Accepted General Claims;

BGCCC is the Base General Claims Cash Consideration; and

IGCCP is the Initial General Claim Cash Payout for the subject Accepted General Claim, to be rounded down to the nearest cent.

““Intercompany Claim” means the aggregate value of any Claim(s) of Hyflux or a Subsidiary of Hyflux that is not an Excluded Claim, but excluding the HMM Claim.

"Intercompany Claimant" means any person that holds an Intercompany Claim.

"Investor" means Utico FZC.

"KfW" means KfW IPEX-Bank GmbH.

"KfW Facility" means the facility agreement dated 29 May 2013 entered into between: (i) Hydrochem, as borrower; (ii) the Company, as guarantor; and (iii) KfW, as lender.

"Liability" or "Liabilities" means any debt, liability or obligation whether it is fixed or undetermined, whether incurred solely or jointly or as principal or surety or in any other capacity, whether or not it involves the payment of money or performance of an act or obligation and whether it arises at common law, in equity or by statute, in Singapore or any other jurisdiction, or in any manner whatsoever. For the avoidance of doubt, Liability includes any debt, liability or obligation that is present, future, prospective, actual or contingent.

"Long-Stop Date" means the Long-Stop Date (as defined in the Restructuring Agreement) or such later date as the Company and the Investor may agree in writing.

"MHI Settlement Agreement" means the settlement agreement 2 dated 26 December 2019 entered into between: (i) Mitsubishi Heavy Industries, Ltd; (ii) Mitsubishi Heavy Industries Asia Pacific Pte Ltd; (iii) Mitsubishi Heavy Industries Environmental & Chemical Engineering Co, Ltd; (iv) Hyflux; (v) HE; (vi) the Company; (vii) TuasOne Pte Ltd; and (viii) TuasOne Environmental Engineering Pte Ltd, a copy of which is set out at Appendix E of the Explanatory Statement.

"MW Claim" means any Claim(s) of Multi Water Holdings Ltd or a Subsidiary of Multi Water Holdings Ltd that is not an Excluded Claim.

"Other Claim" means the aggregate value of any Claim(s) other than an Excluded Claim, a General Trade Claim, the HMM Claim or a Subordinated Claim.

"Other Claimant" means any person that holds an Other Claim.

"Personnel" means, in relation to any person, its current and former officers, partners, directors, employees, staff, agents, counsel and other representatives.

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"Proof of Claim" means a proof setting out the claim of a Scheme Party substantially in the form set out at Schedule 3 of the Scheme and Appendix C of the Explanatory Statement.

"Proof Regulations" means the Companies (Proofs of Debt in Schemes of Arrangement) Regulation 2017 (No S 245) of Singapore.

"QDC EPC Contract" means the engineering, procurement and construction contract entered into between Qurayyat Desalination SAOC and the Company on 28 October 2015, and as supplemented, amended and restated from time to time in relation to a water desalination project in Qurayyat, The Sultanate of Oman.

"Record Date" means 5:00 pm on 11 March 2020, being the latest time a Proof of Claim must be submitted to the Chairman to be assessed for the purposes of voting on this Scheme and determining the entitlements of the Scheme Parties to Scheme Consideration.

"Restructuring" means the financial and corporate restructuring of the Group in accordance with and as implemented through the 211B Proceedings, the Hyflux Scheme, the HE Scheme, the HMM Scheme, the Scheme and the Restructuring Documents.

"Restructuring Agreement" means the restructuring agreement dated 26 November 2019 entered into between: (i) Hyflux, as the target company; and (ii) the Investor, as the investor, and which is set out at Appendix B of the Explanatory Statement.

"Restructuring Documents" means the Restructuring Documents under and as defined in the Implementation Deed.

"Restructuring Effective Date" means the "Restructuring Effective Date" as defined in the Implementation Deed.

"Scheme" means the scheme of arrangement proposed by the Company under Section 210 of the Act in its present form or with or subject to any modifications, additions or conditions approved or imposed by the Court or approved in accordance with its terms.

"Scheme Claims" means the General Claims, the HMM Claim and the Subordinated Claims.

"Scheme Consideration" means, in respect of:

(a) the Accepted General Claims: the General Claims Cash Consideration;

(b) the Accepted HMM Claim: the HMM Claim Cash Consideration; and

(c) the Accepted Subordinated Claims: the Subordinated Claims Cash Consideration.

"Scheme Effective Date" means the date on which the Court order sanctioning the Scheme under the Act is lodged with ACRA.

“Schemes Effective Date” means the date on which the latest of the Scheme Effective Date, the Hyflux Scheme Effective Date, the HMM Scheme Effective Date and the HE Scheme Effective Date occurs.

"Scheme Manager" means the person appointed from time to time by the Court to administer the Scheme, which may include Ms Angela Ee and Mr Glenn Peters, both of EY Corporate Advisors Pte Ltd.

"Scheme Meetings" means the meetings of the Scheme Parties to vote on the Scheme convened pursuant to an order of the Court (and any meetings called following an adjournment).

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"Scheme Parties" means, the General Claimants, HMM and the Subordinated Claimants.

"Settlement Date" means the date falling seven (7) Business Days after the Restructuring Effective Date.

"Singapore" means the Republic of Singapore.

"Subsidiary" means a subsidiary within the meaning of Section 5 of the Act.

"Subordinated Claim" means any Intercompany Claim and any MW Claim.

"Subordinated Claimant" means any person that holds a Subordinated Claim.

"Subordinated Claims Cash Consideration" means cash of an amount equal to the total sum of all Subordinated Claim Cash Payouts.

"Subordinated Claim Cash Payout" means in respect of each Accepted Subordinated Claim, a cash payout of S$1.

"Trade Creditors’ Payment" means the payment to be received by the Company under Clause 5.3(c) of the MHI Settlement Agreement.

"TuasOne EPC Contract" means the contract for design, engineering, procurement, construction, completion, start-up, testing and commissioning of waste-to-energy plant dated 26 April 2016 entered into between: (i) TuasOne Pte Ltd, as employer; and (ii) the Company, as contractor.

"TuasOne Facility" means the facility agreement dated 12 May 2016 entered into between: (i) TuasOne Pte Ltd, as borrower; (ii) the banks and financial institutions listed in Schedule 1, as original lenders; (iii) DBS Bank Ltd, Maybank Kim Eng Securities Pte Ltd, Mizuho Bank, Ltd and The Bank of Tokyo-Mitsubishi UFJ, Ltd, as arranger; (iv) Malayan Banking Berhad, Singapore Branch, as agent; and (v) Malayan Banking Berhad, Singapore Branch, as security trustee.

"TuasOne WTE Project" means the Project as defined in the TuasOne EPC Contract.

1.2 In this Explanatory Statement, unless the context otherwise requires or as otherwise expressly stated:

1.2.1 references to Clauses and Appendices are references to clauses and schedules of this Explanatory Statement;

1.2.2 references to a person include a reference to an individual, firm, partnership, company, corporation, unincorporated body of persons or any state or state agency;

1.2.3 references to a statute, statutory provision or regulatory rule or guidance include references to the same as subsequently modified, amended or re-enacted from time to time;

1.2.4 references to an agreement, deed or document shall be deemed also to refer to such agreement, deed or document as amended, supplemented, restated, verified, replaced and/or novated (in whole or in part) from time to time and to any agreement, deed or document executed pursuant thereto, provided that such amendment, supplement, restatement, verification, replacement and/or novation has, to the extent it relates to a Restructuring Document or the Scheme, been made in accordance with the terms of such Restructuring Document and/or the Scheme (as applicable);

1.2.5 the singular includes the plural and vice versa and words importing one gender shall include all genders;

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1.2.6 references to "including" shall be construed as references to "including without limitation" and "include", "includes" and "included" shall be construed accordingly;

1.2.7 headings to Clauses and Appendices are for ease of reference only and shall not affect the interpretation of this Explanatory Statement;

1.2.8 references to a period of days shall include Saturdays, Sundays and public holidays and where the date which is the final day of a period of days is not a Business Day, that date will be adjusted so that it is the first following day which is a Business Day;

1.2.9 references to "dollar" or to "S$" are references to the lawful currency from time to time of Singapore;

1.2.10 references to time shall be to Singapore time; and

1.2.11 where any amount is specified in this Explanatory Statement (including in any definition) in respect of any Scheme Consideration, that amount is subject to rounding in accordance with the terms of the Scheme.

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Appendix B – Restructuring Agreement

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Appendix C – Proof of Claim Forms

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PROOF OF CLAIM FORM (FOR BANKS AND CONTINGENT CLAIMANTS) HYDROCHEM (S) PTE. LTD.

(Company Registration No. UEN No. 198902670Z)

(Incorporated in the Republic of Singapore on 30 June 1989) (the "Company")

For use in connection with the notice published on 27 February 2020 for meeting(s) to be held for considering and voting on a compromise or arrangement under the Companies Act (Cap. 50) (“Scheme Meeting(s)”)

involving the obligations owed by the Company.

PLEASE REFER TO THE NOTES SET OUT AT THE END OF THIS FORM WHEN COMPLETING THIS FORM

1. Particulars of party filing proof in relation to Scheme Meeting(s):

Company

Name

Company/Business registration number

Address Contact number(s)

Email address:

Reference number (if any) #

To rely on previous proof of claim filed

(Please indicate with a tick ())##

# Please indicate reference number to be quoted for future correspondence in relation to this matter with the Company, Chairman of the Scheme Meeting(s) and/or any relevant representative or appointed person in relation to the Scheme Meeting(s).

## If you wish to rely on the proof of claim form you had previously filed with the Company between 1 February 2019 and 1 March 2019, please indicate so with a tick (). If you tick this column, please do not fill in the particulars of your claim(s) in paragraph 2. The particulars in your previously filed proof will be regarded as re-submitted. If you have already filed a proof of claim form between 9 January 2020 and 27 February 2020, your proof of claim shall be considered as submitted for the purposes of the Scheme Meeting(s) and you do not need to file again unless you would like to file a fresh proof of claim or wish to amend your proof of claim. If so, the earlier form(s) received will be disregarded for the purposes of the Scheme Meeting(s).

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2. Particulars of claim(s) against the Company:

S/N Date claim arose ####

Payment due date

Brief details of claim(s)### Currency Amount Claimed

1.

2.

3.

4.

3. Security Held (Please indicate "NIL" if no securities are held by creditor)

Brief Description & Value of Securities

### Please enclose or attach copies of documents substantiating the amounts claimed and/or security held (if any) when filing

this form. The onus is upon the party claiming payment to prove the amounts claimed. Failure to do so may result in the claim being rejected by the Chairman of the Scheme Meeting(s).

#### The amount claimed shall be for all claims against the Company as at 11 March 2020 (including interest).

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4. The completed proof of claim (with the relevant supporting documents) can be submitted in either hard copy or via email to [email protected]. Hard copy proofs of claim are to be sent to: Hyflux Ltd, 80 Bendemeer Road, Singapore 339949.

5. The deadline for submission of the completed proof of claim (with relevant supporting documents) is 5.00 pm on Wednesday, 11 March 2020.

6. I/We declare that to the best of my knowledge and belief, the Company owes the party set out in paragraph 1 above the obligations set out in paragraph 2 above.

Warning Lodging a false proof of debt is a criminal offence punishable with fine or imprisonment or both.

Dated the day of 2020.

Signature and Company Stamp:

……………………………………………......


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NOTES:

1 A separate form for purpose of instructions on voting will be provided to the parties whose claims are admitted in relation to the Scheme Meeting(s).

2 Please enclose or attach copies of documents substantiating the obligation claimed when filing this form. The onus is upon the party claiming to be owed an obligation to prove the obligation claimed. Failure to substantiate the obligations may result in the claim being rejected by the Chairman of the Scheme Meeting(s).

3 By submitting this form, you represent, warrant and undertake to the Company and/or the Chairman of the Scheme Meeting(s) that any personal data of any individual provided has been obtained with such individual’s consent and hereby consents on behalf of such individual to the collection, processing, use and disclosure of his/her personal data by the Company and/or the Chairman of the Scheme Meeting(s) (and any of their respective officers), in each case, in accordance with the provisions of the Singapore Personal Data Protection Act 2012 (No. 26 of 2012). Any consent given hereunder in relation to personal data shall survive death, incapacity, bankruptcy or insolvency of any such individual and the holding of the Scheme Meeting(s). For the purposes hereunder, "personal data" has the meaning ascribed to it in the Singapore Personal Data Protection Act 2012 (No. 26 of 2012).

PROOF OF CLAIM

NAME: ______________________________________

Hyflux Ltd


STAMP

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PROOF OF CLAIM FORM (TRADE CREDITORS)

HYDROCHEM (S) PTE LTD (Company Registration No. 198902670Z)


For use in connection with the notice published on 27 February 2020 for meeting(s) to be held for considering and voting on a compromise or arrangement under the Companies Act (Cap. 50) (“Scheme Meeting(s)”) involving

obligations owed by the Company.

PLEASE REFER TO THE NOTES SET OUT AT THE END OF THIS FORM WHEN COMPLETING THIS FORM

1. Particulars of party filing proof:

Company

Name

Company/Business registration number

Address Contact number(s)

Email address

Reference number

(if required) #

To rely on previous proof of claim filed

(Please indicate with a tick ())##

# Please indicate reference number to be quoted for future correspondence in relation to this matter with the Company,

Chairman of the Scheme Meeting(s) and/or any relevant representative or appointed person in relation to the Scheme Meeting(s).

## If you wish to rely on the proof of claim form you had previously filed with the Company between 1 February 2019 and 1 March 2019, please indicate so with a tick (). If you tick this column, please do not fill in the particulars of your claim(s) in paragraph 2. The particulars in your previously filed proof will be regarded as re-submitted. If you have already filed a proof of claim form between 9 January 2020 and 27 February 2020, your proof of claim shall be considered as submitted for the purposes of the Scheme Meeting(s) and you do not need to file again unless you would like to file a fresh proof of claim or wish to amend your proof of claim. If so, the earlier form(s) received will be disregarded for the purposes of the Scheme Meeting(s).

545804-4-6-v4.0 2 17-40739547

2. Particulars of claim(s) against the Company:

S/N Date claim arose (eg, date services were contracted, date work was done, date goods were delivered etc) ####

Payment due date (eg, date of invoice)

Brief details of claim(s)### Project in respect of which the claim is made

Amount claimed

1.

2.

3.

4.

3. Security Held (Please indicate "NIL" if no securities are held by creditor)

Brief Description & Value of Securities

### Please enclose or attach copies of documents substantiating the amounts claimed and/or security held (if any)

when filing this form. The onus is upon the party claiming payment to prove the amounts claimed. Failure to do so may result in the claim being rejected by the Chairman of the Scheme Meeting(s).

#### Only claims arising prior to or on 22 May 2018 (regardless of invoice date or when payment is claimed) are to be listed in this proof of claim (“Pre-Moratorium Claims”). The amount(s) asserted in respect of the Pre-Moratorium Claims (including interest) should be calculated up to the cut-off date of 11 March 2020.

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4. The completed proof of claim (with the relevant supporting documents) can be submitted in either hard copy or via email to [email protected]. Hard copy proofs of claim are to be sent to: Hyflux Ltd, 80 Bendemeer Road, Singapore 339949.

5. The deadline for submission of the completed proof of claim (with relevant supporting documents) is 5.00 pm on Wednesday, 11 March 2020.

6. I/We declare that to the best of my knowledge and belief, the Company owes the party set out in paragraph 1 above the amounts set out in paragraph 2 above.

Warning

Lodging a false proof of debt is a criminal offence punishable with fine or imprisonment or both.

Dated the day of 2020.

Signature and Company Stamp:

……………………………………………......


545804-4-6-v4.0 4 17-40739547

NOTES:

1 A separate form for purpose of instructions on voting will be provided to the parties whose claims are admitted in relation to the Scheme Meeting(s).

2 By submitting this form, you represent, warrant and undertake to the Company and/or the Chairman of the Scheme Meeting(s) that any personal data of any individual provided has been obtained with such individual’s consent and hereby consents on behalf of such individual to the collection, processing, use and disclosure of his/her personal data by the Company and/or the Chairman of the Scheme Meeting(s) (and any of their respective officers), in each case, in accordance with the provisions of the Singapore Personal Data Protection Act 2012 (No. 26 of 2012). Any consent given hereunder in relation to personal data shall survive death, incapacity, bankruptcy or insolvency of any such individual and the holding of the Scheme Meeting(s). For the purposes hereunder, "personal data" has the meaning ascribed to it in the Singapore Personal Data Protection Act 2012 (No. 26 of 2012).

STAMP

PROOF OF CLAIM

NAME: ______________________________________

Hyflux Ltd


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Appendix D – Proxy Forms

1

HYDROCHEM (S) PTE. LTD. (Company Registration No. 198902670Z)


PROXY FORM FOR SCHEME MEETING

Note: Please refer to the Company's notice of a scheme meeting ("Scheme Meeting") of the Company to be held at 80 Bendemeer Road, Singapore 339949 on 23 April 2020 at 10.00 a.m. (or such other date, time and place as may be notified by announcement on SGXNet or otherwise) and at any adjournment thereof, for the purpose of considering and, if thought fit, approving (with or without modification) the scheme of arrangement (the "Scheme") referred to in the said notice convening the Scheme Meeting.

(This form is to be completed only by a trade creditor OR Subordinated Claimant OR Other Claimant of the Company. See Note 1 below.)

Capitalised terms used herein but not defined shall have the meanings given to them in the Scheme dated 17 March 2020.

DETAILS OF TRADE CREDITOR OR SUBORDINATED CLAIMANT OR OTHER CLAIMANT

We, the undersigned, being a trade creditor / Subordinated Claimant / Other Claimant of the Company in relation to ______________________________________________________________ [describe relevant contract(s), project, services, work done etc.] dated ____________________ [date of contract, date work or services performed, date goods were delivered etc], hereby appoint the following as our proxy ("Proxy") to attend the Scheme Meeting or any adjournment thereof:

(See Note 2)

DETAILS OF PROXY

(Note: You can appoint only one proxy. If you leave this section blank, the Chairman of the Scheme Meeting will act as your proxy)

Name Organisation Address NRIC / Passport No. ^

or failing *him/her, the Chairman of the Scheme Meeting ("Chairman"), as our proxy to attend and to vote for us on our behalf at the Scheme Meeting, and at such Scheme Meeting (or at any adjournment thereof) to vote for us and in our name(s) as indicated below, and if no such indication is given, as our proxy thinks fit.

^ The Proxy is to present his/her passport (if he/she is not a Singapore citizen) or Singapore National Registration Identity Card (if he/she is a Singapore citizen or a Singapore permanent resident holding a blue Singapore National Registration Identity Card) immediately prior to the Scheme Meeting to gain entry to the Scheme Meeting

We acknowledge that the appointment of such Proxy is (subject to Notes 3 and 9 below) neither revocable nor subject to amendments after 10.00 a.m. (Singapore time) on 20 April 2020, which is the Expiration Time (as defined in Note 6 below).

VOTE

The Proxy is authorised only to vote on our behalf in favour of ("FOR") or against ("AGAINST") the Scheme as hereunder indicated (by a √ mark).

Note: If you leave both boxes blank, your proxy will have complete discretion as to how to vote on your behalf and such vote, once cast by your proxy, will be binding on you. Where your proxy is the

2

Chairman and you leave both boxes blank, such vote will be cast FOR the Scheme (for the avoidance of doubt, if the Chairman is your proxy and you have voted AGAINST the Scheme, such vote will be cast AGAINST the Scheme). DO NOT TICK IN BOTH BOXES AS THIS WILL INVALIDATE YOUR VOTE.

FOR (Please indicate with a tick ())

OR AGAINST (Please indicate with a tick ())

Dated this day of ______________day of ___________________ 2020

_____________________________________ Signature(s) or Common Seal Name of trade creditor / Subordinated Claimant / Other Claimant: Important: Please read notes overleaf carefully before completing this form.

3

Notes to Proxy Form:

1. This form is to be completed only by a trade creditor, Subordinated Claimant or Other Claimant of the Company. A trade creditor includes any person or corporation that has supplied services and/or goods to the Company, and includes HMM.

2. A trade creditor, Subordinated Claimant or Other Claimant may only appoint a natural person or the Chairman as a proxy, and may only appoint one such person or the Chairman as a proxy.

3. The appointment of a proxy does not preclude the trade creditor, Subordinated Claimant or Other Claimant from attending and voting at the Scheme Meeting. If a trade creditor, Subordinated Claimant or Other Claimant attends the Scheme Meeting in person, its proxy appointment shall be deemed to be revoked, and the Chairman reserves the right to refuse to admit such proxy to the Scheme Meeting.

4. A trade creditor, Subordinated Claimant or Other Claimant may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative in accordance with its constitutional documents or may under its constitutional documents grant a power of attorney to such person as it thinks fit powers to act as its representative or may have in force a standing authorisation under a pre-existing power of attorney. Attendance by any such representative will be considered as attendance by the trade creditor, Subordinated Claimant or Other Claimant in person.

5. Any alteration made in this Proxy Form must be initialled by each signatory of the appointor who executes this Proxy Form.

6. This Proxy Form (together with the power of attorney or board resolution (or a certified copy thereof), if any, under which it is signed), must be deposited at the office of the Company's meeting agent, Boardroom Corporate & Advisory Services Pte. Ltd. (the "Meeting Agent"), at 50 Raffles Place #32-01 Singapore Land Tower, Singapore 048623, not less than 72 hours before the time appointed for holding the Scheme Meeting (the "Expiration Time").

7. This Proxy Form must be executed under the hand of the appointor or his attorney duly authorised in writing or, where the Proxy Form is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Any alteration made to the Proxy Form should be initialled by each signatory of the person who signs this Proxy Form.

8. The Chairman shall be entitled to reject this Proxy Form if it is incomplete, improperly completed, unexecuted or improperly executed, illegible, or where in the Chairman's opinion the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in this Proxy Form, or if this Proxy Form is not received by the Meeting Agent prior to the Expiration Time.

9. A trade creditor, Subordinated Claimant or Other Claimant who has already submitted a Proxy Form to the Meeting Agent may only subsequently revoke (subject to the revocation of proxy set out in Note 3 above) or amend such Proxy Form by submitting a new Proxy Form to the Meeting Agent not later than the Expiration Time. In that case, the Meeting Agent shall disregard the previous Proxy Form(s) and refer only to the last Proxy Form received.

10. Trade creditors, Subordinated Claimants or Other Claimants who submit this Proxy Form represent, warrant and undertake to the Company, the Meeting Agent and the Chairman that any personal data of any individual provided has been obtained with such individual's consent and hereby consents on behalf of such individual to the collection, processing, use and disclosure of his/her personal data by the Company, the Chairman or the Meeting Agent (and any of their respective officers, employees or advisers), in each case, in accordance with the terms of the Scheme and the provisions of the Singapore Personal Data Protection Act 2012 (No. 26 of 2012). Any consent given hereunder in relation to personal data shall survive death, incapacity, bankruptcy or insolvency of any such individual and the termination or expiration

4

of the Scheme. For the purposes hereunder, "personal data" has the meaning ascribed to it in the Singapore Personal Data Protection Act 2012 (No. 26 of 2012).

545804-4-6-v4.0 6 17-40739547

Appendix E – MHI Settlement Agreement

- 1 -

DATED THE 26th DAY OF DECEMBER 2019

Between

MITSUBISHI HEAVY INDUSTRIES, LTD.

MITSUBISHI HEAVY INDUSTRIES ASIA PACIFIC PTE. LTD.

MITSUBISHI HEAVY INDUSTRIES ENVIRONMENTAL & CHEMICAL ENGINEERING CO., LTD

HYFLUX LTD.

HYFLUX ENGINEERING PTE. LTD.

HYDROCHEM (S) PTE. LTD.

TUASONE PTE. LTD.

and

TUASONE ENVIRONMENTAL ENGINEERING PTE. LTD.

SETTLEMENT AGREEMENT

- 2 -

TABLE OF CONTENTS

1 DEFINITIONS AND INTERPRETATION ....................................................................................- 4 -

2 NOVATION OF EPC CONTRACT ..............................................................................................- 9 -

3 EPC SUB-CONTRACT ...............................................................................................................- 9 -

4 RELEASE AND DISCHARGE .....................................................................................................- 9 -

5 DIVISION OF MILESTONE PAYMENTS BETWEEN MHI AND HYDROCHEM AND MHI DEBT .. - 10 -

6 ARRANGEMENTS FOR UTILISATION OF FACILITY ............................................................ - 12 -

7 TERMINATION......................................................................................................................... - 13 -

8 LEGAL PROCEEDINGS .......................................................................................................... - 14 -

9 DEFAULT CALL OPTION ........................................................................................................ - 14 -

10 INTERACTION WITH SCHEME OF ARRANGEMENT ....................................................... - 15 -

11 COSTS ................................................................................................................................. - 15 -

12 AUTHORITY......................................................................................................................... - 15 -

13 NO ADMISSION ................................................................................................................... - 15 -

14 FURTHER ASSURANCE ..................................................................................................... - 15 -

15 ILLEGALITY ......................................................................................................................... - 15 -

16 VARIATIONS........................................................................................................................ - 16 -

17 ENTIRE AGREEMENT ........................................................................................................ - 16 -

18 REMEDIES AND WAIVERS ................................................................................................ - 16 -

19 RESTRICTIONS ON ASSIGNMENT ................................................................................... - 16 -

20 CONFIDENTIALITY ............................................................................................................. - 16 -

21 NOTICES ............................................................................................................................. - 17 -

22 EQUITABLE REMEDIES ..................................................................................................... - 18 -

23 CONSEQUENTIAL LOSS .................................................................................................... - 18 -

24 COUNTERPARTS ............................................................................................................... - 18 -

25 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT ........................................................... - 18 -

26 GOVERNING LAW .............................................................................................................. - 18 -

- 3 -

THIS SETTLEMENT AGREEMENT (this “Agreement”) is made on 26 December 2019 BETWEEN: (1) MITSUBISHI HEAVY INDUSTRIES, LTD., a company incorporated under the laws of Japan with

corporate registration number 0104-01-050387 and having its registered office at 2-3, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8332, Japan (“MHIL”);

(2) MITSUBISHI HEAVY INDUSTRIES ASIA PACIFIC PTE. LTD., a company incorporated under the laws of Singapore with company registration number 201020850Z, and having its registered office at 150 Beach Rd, #29-00 Gateway West Singapore 189270 (“MHIAP”);

(3) MITSUBISHI HEAVY INDUSTRIES ENVIRONMENTAL & CHEMICAL ENGINEERING CO., LTD., a company incorporated under the laws of Japan with company registration number 0200-01-083540, and having its registered office at 17th floor, Yokohama Blue Avenue Building, 4-2 Minatomirai 4-chome, Nishi-ku, Yokohama, Kanagawa 220-0012 Japan (“MHIECE”, and together with MHIL and MHIAP, collectively, “MHI”);

(4) HYFLUX LTD., a company incorporated under the laws of Singapore with company registration number 200002722Z, and having its registered office at 80 Bendemeer Road, Singapore 339949 (“Hyflux”);

(5) HYDROCHEM (S) PTE. LTD., a company incorporated under the laws of Singapore with company registration number 198902670Z, and having its registered office at 80 Bendemeer Road, Singapore 339949 (“Hydrochem”);

(6) HYFLUX ENGINEERING PTE. LTD., a company incorporated under the laws of Singapore with company registration number 200009792D and having its registered office at 80 Bendemeer Road, Singapore 339949 (“HEPL”);

(7) TUASONE PTE. LTD., a company incorporated under the laws of Singapore with company registration number 201535043C and having its registered office at 80 Bendemeer Road, Singapore 339949 (“TuasOne”); and

(8) TUASONE ENVIRONMENTAL ENGINEERING PTE. LTD., a company incorporated under the laws of Singapore with company registration number 201608014M and having its registered office at 80 Bendemeer Road, Singapore 339949 (“TEE”),

(collectively, the "Parties" and each, a "Party"). WHEREAS: (A) MHIL and Hyflux are shareholders of TuasOne, the project company in respect of which the

Project (as defined in the EPC Contract referred to below) is to be constructed. MHIL, Hyflux and TuasOne entered into the Shareholders’ Agreement dated 12 May 2016 (the “Shareholders’ Agreement”) to, inter alia, set out certain terms of the relationship between MHIL and Hyflux as shareholders of TuasOne.

(B) MHIL and Hyflux had entered into the Shareholders Support Agreement dated 12 May 2016 (the

“SSA”) with TuasOne as borrower and Malayan Banking Berhad, Singapore Branch as agent, pursuant to which, inter alia, MHIL and Hyflux agreed to make certain shareholder contributions to TuasOne.

(C) TuasOne and Hydrochem had entered into the Conditions of Contract for Design, Engineering,

Procurement, Construction, Completion, Start-up, Testing and Commissioning of Waste-to-Energy Plant dated 26 April 2016 (the “EPC Contract”) pursuant to which, inter alia, Hydrochem

- 4 -

agreed to execute the Works (as defined therein) and TuasOne agreed to make certain payments to Hydrochem in each case, in accordance with the terms and conditions of the EPC Contract.

(D) Hydrochem, MHIAP and MHIECE had entered into the Conditions of Sub-Contract for

Engineering, Procurement, Supervision of Installation (Deployment of Technical Advisors), Testing and Commissioning of Waste-to-Energy Plant dated 12 May 2016 (the “EPC Sub-Contract”) pursuant to which, inter alia, MHIAP and MHIECE (collectively, the “EPC Sub-Contractor”) agreed to carry out the Sub-Contract Works (as defined therein) and Hydrochem agreed to make certain payments to the EPC Sub-Contractor, in each case, in accordance with the terms and conditions of the EPC Sub-Contract.

(E) Certain disputes and/or claims have arisen between the Parties to and in connection with the

EPC Sub-Contract, including the claims and counterclaims brought in Singapore International Arbitration Centre Arbitration No. 001 of 2018 (the “SIAC Arbitration”) and the adjudication under the Building and Construction Industry Security of Payment Act (Cap. 30B) (2006 Rev. Ed.) in SOP/AA 110 of 2018 (the “SOPA Adjudication”). Further, due to the debt restructuring of Hyflux, Hydrochem and their related companies, it is necessary to restructure the funding for the Project, including for the EPC Sub-Contract, and replace the EPC Contractor for and as defined in the EPC Contract, to ensure completion of the Project.

(F) Hyflux, Hydrochem and MHI had entered into a term sheet on 28 December 2018 (“TS1”). (G) Hyflux, Hydrochem, HEPL, MHI, TuasOne and TEE had entered into a settlement agreement

dated 15 February 2019 (“Settlement Agreement 1”) to bring into effect the terms of TS1. (H) Subsequently, Parties had entered into the Term Sheet on 9 September 2019 (as defined

herein), which sets out the terms of the agreement between the Parties in respect of a novation of the EPC Contract from Hydrochem to MHIAP. Parties also agree that they shall enter into this Agreement to give effect to the terms of the Term Sheet.

(I) Without any admission whatsoever by any Party as to liability or as to the validity of any such

disputes and/or claims, including but not limited to those in the SIAC Arbitration, the Parties wish to enter into this Agreement, in full and final settlement of any disputes and claims between the Parties, subject to the provisions of this Agreement and as further specified in this Agreement, and in consideration of the mutual promises set forth in this Agreement.

(J) In light of the uncertain financial situation of Hyflux, Hydrochem and their related companies,

each of the Parties have for the purpose of carrying on their respective businesses agreed in good faith to the entry into and implementation of the transactions contemplated by this Agreement and have considered that there are reasonable grounds for believing that this Agreement and the transactions hereunder would be to their respective benefits.

NOW THIS AGREEMENT WITNESSETH as follows:

1 DEFINITIONS AND INTERPRETATION 1.1 Definitions

In this Agreement, all capitalised words, terms and phrases shall have the meanings given to them in this Clause 1.1. Other capitalised words, terms and phrases referred to in this Agreement but not defined in Clause 1.1 shall have the meanings given to them in the EPC Contract or the EPC Sub-Contract, as the case may be. “Agreement on Post-Default Withdrawals” means the Agreement on Post-Default Withdrawals from Disbursement Account and GST Account dated 12 March 2019 and entered into between TuasOne as borrower and account beneficiary, Hydrochem as account trustee and EPC Contractor and Malayan Banking Berhad, Singapore Branch, as Agent.

- 5 -

“Agent” means Malayan Banking Berhad, Singapore Branch, in its capacity as agent under the “Amended and Restated Facility Agreement. “Amended and Restated Facility Agreement” means the amended and restated Facility Agreement entered into on the same date as this Agreement between, inter alia, TuasOne and Malayan Banking Berhad, Singapore Branch (acting as Agent and Security Trustee). “Amended and Restated Intercreditor Agreement” means the amended and restated Intercreditor Agreement entered into on the same date as this Agreement between, inter alia, TuasOne, Hyflux, MHI, MHIAP and Malayan Banking Berhad, Singapore Branch (acting as Agent and Security Trustee). “Amended and Restated Shareholders’ Support Agreement” means the amended and restated Shareholders’ Support Agreement entered into on the same date as this Agreement between Hyflux, MHI, TuasOne and Malayan Banking Berhad, Singapore Branch (acting as Agent). “B&V” means Black & Veatch (SEA) Pte Ltd. “Change in Control” means in respect of any person, a change in the persons who, directly or indirectly, ultimately control that person. For the purposes of this definition, the term 'control' (including the terms 'controlled by' and 'under common control with') as applied to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management of that person whether through ownership of shares, voting securities or otherwise. “Declaration of Trust over Account” means the Declaration of Trust over Account dated 12 March 2019 and entered into between TuasOne as borrower and account beneficiary, Hydrochem as account trustee and Malayan Banking Berhad, Singapore Branch, as Agent. “Deed of Novation” means the Deed of Novation dated on or about the date of this Agreement between TuasOne, Hydrochem, MHIAP and MHIECE in respect of the novation of the EPC Contract. “Default Call Option” has the meaning given to such term in the Shareholders’ Agreement and/or the TEE Shareholders’ Agreement, as the context requires. “Dispute” has the meaning given to such term in Clause 26 of this Agreement. “EPC Contract” has the meaning given to it in Recital (C) of this Agreement. “EPC Sub-Contract” has the meaning given to it in Recital (D) of this Agreement. “EPC Sub-Contractor” has the meaning given to it in Recital (D) of this Agreement.

“HEPL” means Hyflux Engineering Pte. Ltd. “HEPL Scheme” means a scheme of arrangement to be proposed and sanctioned by the Court by no later than the Scheme Deadline in respect of HEPL pursuant to the Restructuring Agreement. “Hydrochem” has the meaning given to it in the introductory clause to this Agreement. “Hydrochem Account Agreement” means the Hydrochem Account Agreement dated 12 March 2019 and entered into between Hydrochem as EPC Contractor and Malayan Banking Berhad, Singapore Branch, as EPC Contractor account bank and agent. “Hyflux” has the meaning given to it in the introductory clause to this Agreement. “Hyflux Group” means Hyflux and its subsidiaries.

- 6 -

“Hyflux Scheme” means a scheme of arrangement to be proposed and sanctioned by the Court by no later than the Scheme Deadline in respect of Hyflux pursuant to the Restructuring Agreement.

“MHIAP” has the meaning given to it in the introductory clause to this Agreement. “MHIECE” has the meaning given to it in the introductory clause to this Agreement. “MHIL” has the meaning given to it in the introductory clause to this Agreement. “Milestone Event” means each of the events referred to in the Milestone Payment Schedule at Schedule 4 to the EPC Contract. “Milestone Payment” means a payment to be made in respect of a Milestone Event. “Moratorium Applications” means the applications for a moratorium under Section 211B(1) of the Companies Act (Cap. 50) in respect of each of Hyflux, Hydrochem and HEPL, by way of HC/OS 633/2018, HC/OS 638/2018 and HC/OS 634/2019 respectively, including all subsequent applications for extensions of the moratoria, most recently by way of HC/SUM 5930/2019, HC/SUM 5933/2019 and HC/SUM 5931/2019 respectively. “Moratorium Orders” means, where appropriate, the orders of the High Court of the Republic of Singapore (“Singapore”) granting the initial moratorium in respect of each of Hyflux, Hydrochem, and HEPL by way of HC/ORC 3964/2018, HC/ORC 3962/2018 and HC/ORC 3961/2018 respectively, as extended by way of (i) HC/ORC 8111/2018, HC/ORC 8110/2018 and HC/ORC 8109/2018, (ii) HC/ORC 2983/2019, HC/ORC 3015/2019 and HC/ORC 3014/2019, (iii) HC/ORC 3900/2019, HC/ORC 3903/2019 and HC/ORC 3901/2019, (iv) HC/ORC 5369/2019, HC/ORC 5368/2019 and HC/ORC 5367/2019, (v) HC/ORC 6685/2019, HC/ORC 6684/2019, and HC/ORC 6686/2019, and (vi) HC/ORC 8431/2019, HC/ORC 8433/2019 and HC/ORC 8430/2019, respectively. “NEA” means the National Environment Agency of Singapore, a body corporate, reconstituted under and by virtue of the National Environment Agency Act (Cap 195), and its assigns and successors at law. “New Scheduled Project Commercial Operation Date” means the date falling at the end of 13 months from the date of this Agreement.

“O&M Contract” means the Conditions of Contract for Operation and Maintenance of Waste-to-Energy Plant dated 12 May 2016 and entered into between TuasOne and TEE. “Parent Company Guarantee (EPC Sub-Contract)” means the Deed of Guarantee dated 12 May 2016 issued by Hyflux as guarantor in favour of the EPC Sub-Contractors whereby, amongst other things, Hyflux guarantees to the EPC Sub-Contractors that Hydrochem will perform all of its obligations pursuant to and in accordance with the EPC Sub-Contract. “Parent Company Guarantee (Hydrochem)” means the Deed of Guarantee dated 12 May 2016 issued by Hyflux as guarantor in favour of TuasOne whereby, amongst other things, Hyflux guarantees to TuasOne that Hydrochem will perform all of its obligations pursuant to and in accordance with the EPC Contract. “Parent Company Guarantee (MHIAP)” means a Deed of Guarantee to be issued on the Transfer Date by MHIL as guarantor in favour of TuasOne under the EPC Contract in substantially the same form as the Parent Company Guarantee (Hydrochem). “Party” has the meaning given to it in the introductory clause to this Agreement. “Project Commercial Operation” has the meaning given to it in the EPC Contract.

- 7 -

“Restructuring Agreement” means the restructuring agreement entered into on 26 November 2019 between Hyflux and Utico FZC (and/or a nominee of Utico FZC) pursuant to the Moratorium Orders. “Scheme Deadline” means 15 May 2020 (or such later date as may be agreed by the Parties to this Agreement, acting reasonably). “Second-Ranking Security” is the security granted to MHI or MHIAP as the case may be pursuant to the Second Ranking-Security Documents as defined in the Amended and Restated Intercreditor Agreement. “Shareholders’ Agreement” has the meaning given to it in Recital (A) of this Agreement. “SIAC Arbitration” has the meaning given to it in Recital (E) of this Agreement. “SOPA Adjudication” has the meaning given to it in Recital (E) of this Agreement.

“SSA” has the meaning given to it in Recital (B) of this Agreement. “TEE Shareholders’ Agreement” means the Shareholders Agreement dated 11 May 2016 and entered into between HEPL, MHIECE, MHIAP and TEE. “Term Sheet” means the non-binding term sheet dated 9 September 2019 and entered into between MHIL, MHIAP, MHIECE, Hyflux and Hydrochem.

“Trust Account” means the account no. 04013024077 maintained by Hydrochem as account trustee with Malayan Banking Berhad, Singapore Branch, with TuasOne as beneficial owner, and/or any other account subsequently opened in accordance with or as permitted by the Declaration of Trust over Account, and for the avoidance of doubt, shall also include all sums in the account. “Trust Account Arrangements” means the Agreement on Post-Default Withdrawals, the Declaration of Trust over Account and the Hydrochem Account Agreement. “TuasOne” has the meaning given to it in the introductory clause to this Agreement. “TEE” means TuasOne Environmental Engineering Pte. Ltd. “TuasOne Lenders” means the lenders to TuasOne under the Amended and Restated Facility Agreement. “WESA” means the Waste-to-Energy Services Agreement dated 26 October 2015 and entered into between the NEA and TuasOne. “WESA Amendment Deed” means the WESA Amendment Deed dated on or about this date between the NEA and TuasOne.

1.2 Interpretation In this Agreement, headings are for convenience only and do not affect the interpretation of this

Agreement and, unless the context otherwise requires:

(a) words indicating one gender include all genders; (b) words including the singular also include the plural and words indicating the plural also

include the singular; (c) provisions including the word “agree”, “agreed” or “agreement” require the agreement to

be recorded in writing;

- 8 -

(d) “written” or “in writing” means hand-written, type-written, printed or electronically made, and resulting in a permanent record;

(e) other parts of speech and grammatical forms of a word or phrase defined in this

Agreement have a corresponding meaning; (f) an expression importing a natural person includes any company, partnership, joint

venture, association, corporation or other body corporate and any government or governmental body or government agency (whether or not having separate legal personality);

(g) a reference to any thing (including any right) includes a part of that thing but nothing in

this Clause 1.2(g) implies that performance of part of an obligation constitutes performance of the obligation;

(h) a reference to a clause, party, annexure, appendix, exhibit or schedule is a reference to

a clause of, and a party, annexure, appendix, exhibit and schedule to, this Agreement and a reference to this Agreement includes any annexure, appendix, exhibit and schedule;

(i) a reference to a Law includes all Laws amending, consolidating or replacing it, whether

passed by the same or another government or governmental body or agency with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute;

(j) a covenant or agreement on the part of two or more persons binds them jointly and

severally; (k) a reference to a document includes all amendments or supplements to, or replacements

or novations of, that document; (l) a reference to any authorisation includes the authorisation as varied or replaced; (m) a reference to a body, other than a party to this Agreement (including an institute,

association or authority), whether statutory or not:

(i) which ceases to exist; or (ii) whose powers or functions are transferred to another body,

is a reference to the body which replaces it or which substantially succeeds its powers or function;

(n) a reference to time is to local time in Singapore; (o) all periods of time are based on and computed according to, the Gregorian calendar; (p) a reference to currency is a reference to Singapore currency and all amounts payable

under this Agreement must be paid in Singapore Dollars; (q) references to “include”, “includes”, “including” and the like shall be construed as if

followed by the words “but without limitation”; (r) references to “document” include drawings, plans, records, correspondence and any

other information recorded or stored in any form; (s) references to “information” includes know-how, knowledge, data and information

whatsoever and howsoever held;

- 9 -

(t) any capitalised words, terms, phrases and abbreviations used specifically in any Annex or any attachment to any Annex will have the meanings set forth in that Annex or attachment, as the case may be; and

(u) no provision of this Agreement will be construed adversely to a Party solely on the ground

that the Party was responsible for the preparation of this Agreement or that provision. 1.3 This Agreement is written in, and shall be construed and interpreted in, the English language.

1.4 Save as set out in Clauses 2.1, 4.1(b), 4.1(c), 4.1(e), 5.1, 5.2, 6, 7.1, 11 to 26 herein, TuasOne

shall not have any rights and/or obligations under this Agreement.

2 NOVATION OF EPC CONTRACT 2.1 The EPC Contract shall be novated from Hydrochem to MHIAP by way of the Deed of Novation.

3 EPC SUB-CONTRACT

3.1 Hydrochem and MHIAP agree that the payments due to the EPC Sub-Contractor by Hydrochem as agreed and prescribed in Settlement Agreement 1 shall be replaced and disbursed instead in accordance with the payment terms contained in this Agreement.

4 RELEASE AND DISCHARGE

4.1 As at the date of this Agreement: (a) Settlement Agreement 1 is terminated and no party to Settlement Agreement 1 shall

have any claim against any other party in respect of Settlement Agreement 1.

(b) Subject to Clauses 3 and 4.2 of the Deed of Novation, MHI shall irrevocably release and forever discharge any and all actions, claims, counter-claims, rights, demands, liabilities and rights of set-off (save for the Default Call Option), whether in this jurisdiction or any other, and whether in law or equity, occurring or arising prior to the date of this Agreement, that MHIL, MHIAP and/or MHIECE may have against TuasOne, Hyflux, Hydrochem or HEPL in relation to the Project and the Hyflux Scheme and HEPL Scheme;

(c) Subject to Clause 4.1(f), in relation to such claims as MHIL has or may have against Hyflux and/or TuasOne under or in relation to the Shareholders’ Agreement occurring or arising prior to the date of this Agreement, MHIL shall irrevocably release and forever discharge any such claims;

(d) Subject to Clause 4.1(g), in relation to such claims as MHIAP and/or MHIECE have or may have against HEPL and/or TEE under or in relation to the TEE Shareholders’ Agreement occurring or arising prior to the date of this Agreement, MHIAP and MHIECE shall irrevocably release and forever discharge any such claims;

(e) On and from the date of this Agreement, Hyflux, Hydrochem and HEPL shall irrevocably release and forever discharge any and all actions, claims, counter-claims, rights, demands, liabilities and rights of set-off, whether in this jurisdiction or any other, and whether in law or equity, occurring or arising prior to the date of this Agreement including but not limited to under or in relation to the Shareholder’s Agreement or TEE Shareholder’s Agreement or the Project, that Hyflux, Hydrochem and/or HEPL has or may have against TuasOne, TEE, MHIL, MHIAP, MHIECE and the EPC Sub-Contractor;

- 10 -

(f) On and from the date of this Agreement until the Scheme Deadline, MHIL shall suspend any right it may have in respect of the Default Call Option arising from or to arise from any one or more of the following: (i) events occurring or arising prior to the date of this Agreement; and (ii) the Hyflux Scheme, provided that:

(i) on and from the date of sanctioning of the Hyflux Scheme, MHIL shall

irrevocably waive its rights in respect of the Default Call Option arising from or to arise from any one or more of the following: (i) events occurring or arising prior to the date of this Agreement; and (ii) Hyflux Scheme; and

(ii) any suspended rights in respect of the Default Call Option shall be reinstated upon the earlier of the following occurring: (i) the termination of this Agreement; (ii) the Moratorium Orders not being further extended by the Court save where the Court grants another statutory moratorium in respect of the Hyflux Scheme, or (iii) the Hyflux Scheme not being sanctioned by the Court by the Scheme Deadline.

(g) On and from the date of this Agreement until the Scheme Deadline, each of MHIECE and MHIAP shall suspend any right it may have in respect of the Default Call Option arising from or to arise from any one or more of the following: (i) events occurring or arising prior to the date of this Agreement; and (ii) the HEPL Scheme, provided that: (i) on and from the date of sanctioning of the HEPL Scheme, MHIECE and MHIAP

shall irrevocably waive their respective rights in respect of the Default Call Option arising from or to arise from any one or more of the following: (i) events occurring or arising prior to the date of this Agreement; and (ii) HEPL Scheme; and

(ii) any suspended rights in respect of the Default Call Option shall be reinstated upon the earlier of the following occurring: (i) the termination of this Agreement; and (ii) the Moratorium Orders not being further extended by the Court save where the Court grants another statutory moratorium in respect of the HEPL Scheme; or (iii) the HEPL Scheme not being sanctioned by the Court by the Scheme Deadline.

4.2 It is expressly acknowledged by all Parties to this Agreement that each party enters into this

Agreement without any admission whatsoever by any party as to liability or as to the validity of any disputes and/or claims there may be between the Parties.

4.3 In the event Hyflux, Hydrochem and/or HEPL explore restructuring efforts other than in relation to the Restructuring Agreement, the Parties agree that they will negotiate in good faith with the aim of seeking to agree on a variation to this Agreement in view of such restructuring efforts.

5 DIVISION OF MILESTONE PAYMENTS BETWEEN MHI AND HYDROCHEM AND MHI DEBT 5.1 Subject to Clause 5.2, MHIAP shall be obliged to pay the following sums:

(a) the sum of $78,600,000 in liquidated damages pursuant to Clause 21 of the EPC

Contract, subject to reductions corresponding to (i) the demand and payment made by TuasOne on the EPC Contract Performance Bond (DBS) for the sum of $25,000,000 pursuant to Clause 2.8(e)(i) of the Deed of Novation, and (ii) any additional demands and payments made by TuasOne on the EPC Contract Performance Bond (DBS) insofar as the demands/payments made relate to the sum of $78,600,000 in liquidated damages pursuant to Clause 21 of the EPC Contract, which have accrued prior to the date of this Agreement;

(b) the sum of S$59,614,624.97, being the amount owing by Hydrochem to TuasOne in

relation to advances provided on an ad-hoc basis and pursuant to the Agreement on Post-Default Withdrawals as at the date of this Agreement, subject to any reduction

- 11 -

corresponding to surplus amounts returned from the Trust Account to TuasOne, such payment by MHIAP being a sufficient discharge of the said advances owing by Hydrochem to TuasOne; and

(c) subject to a cap of $4,300,000 and as set out in the Construction Budget (as defined in

the Amended and Restated Facility Agreement), all third party advisor’s costs of the TuasOne Lenders and the NEA, to the extent they are imposed on TuasOne, and provided these are incurred arising from the restructuring of or Moratorium Applications by Hyflux, Hydrochem and/or any of their related companies or are in connection with the trust account arrangements.

5.2 The payment obligations set out in Clause 5.1 above shall become due and payable on each of

the following three circumstances: (a) the date of receipt by MHIAP of the payment of Milestone Payment no. 45; (b) MHIAP submits any claim(s) in aggregate in excess of $155,000,000 in relation to

Milestones nos. 35, 37, 39 to 45 as set out in Schedule 4 to the EPC Contract (as novated) provided always that MHIAP shall only be obliged to pay, by way of set-off, the amounts set out in Clause 5.1 above to the extent of the amount in excess of $155,000,000 which MHI receives pursuant to the said claim(s); and

(c) MHIAP submits any claim(s) in respect of works carried out by Hydrochem, other than in

relation to Milestones nos. 35, 37, 39 to 44 as set out in Schedule 4 to the EPC Contract (as novated), provided always that MHIAP shall only be obliged to pay, by way of set-off, the portion of such claim in respect of works carried out by Hydrochem prior to the date of this Agreement,

provided always in relation to each such circumstance that: (i) if the EPC Contract is terminated by MHIAP pursuant to Clause 2.15 of the Deed of

Novation, Clauses 5.1 and 5.2 of this Agreement shall not apply; and

(ii) the rights of TuasOne to recover the amounts under Clause 5.1 in each of the above circumstances are cumulative (and accordingly TuasOne may recover concurrently in respect of one or more of the circumstances and further no limitation of recovery under any one circumstance shall limit the right of recovery under another circumstance) provided always that shall be no double recovery by TuasOne of amounts set out in Clause 5.1.

5.3 Subject to Clauses 5.1 and 5.2 above, as each Milestone Event is achieved and following receipt

by MHIAP of each Milestone Payment, the corresponding Milestone Payment shall be applied in the following descending order of priority: (a) First, payment to MHIAP of the sum of $155 million as a fixed-price lump sum payment

for assuming the remaining obligations under the EPC Contract, including the warranty obligations. In view of the fixed-price lump sum concept for a fixed projected deadline, MHIAP shall be solely responsible for any cost overrun and/or losses and expenses incurred by MHIAP in completing the construction of the Project in accordance with the EPC Contract. All Milestone Payments made by TuasOne under the EPC Contract shall first be used to pay this sum in priority to any other;

(b) Second, payment to MHIAP of the amount of $100 million; (c) Third:

(i) Payment to Hydrochem of the amount of $15 million, save that the amount of $15 million shall be deducted in the manner set out at Clause 5.3(c)(ii) below. For the avoidance of doubt, Hydrochem may utilize any portion of the payment

- 12 -

received by Hydrochem pursuant to this Clause 5.3(c) in any way in its sole discretion;

(ii) If any pre-moratorium liabilities owing to EPC sub-contractors by Hydrochem are novated to MHI (including any retention sums accrued up to the date of this Agreement), MHI shall be entitled to be paid, out of the amount of $15 million referred to at Clause 5.1(c)(i) above, in the proportion of $0.75 per $1.00 of debt novated to by MHI, and such amount shall be deducted from the payment to be made to Hydrochem referred to at Clause 5.1(c)(i) above. For the avoidance of doubt, the amount that MHI is entitled to under this Clause 5.1(c)(ii) shall be capped at $15 million; and

(d) Fourth, to MHIAP and Hydrochem in the ratio 80:20 respectively.

5.4 Save as provided for above, Hydrochem shall not be entitled to any further payments from TuasOne or MHIAP in relation to the EPC Contract. Such payment to Hydrochem as provided for above shall always be subject to the release and discharge in Clause 4.1(e) above.

5.5 Any claim by MHIAP against Hydrochem in relation to or arising from breach or default of Hydrochem of its obligations under this Agreement, the Deed of Novation or the Term Sheet (including but not limited to any breach of Clause 3.1 and/or 3.2 of the Deed of Novation) shall be capped at the amount paid or payable to Hydrochem under Clause 5.3(d) and may be set off from remaining payments due to Hydrochem pursuant to Clause 5.3(d) above, provided always that MHIAP shall provide a timely notice in writing to Hydrochem of the said breach or default, and allowing Hydrochem first right of cure or repair within 21 working days of notification.

5.6 Subject to the provisions of the Amended and Restated Intercreditor Agreement, TuasOne must pay the MHI Debt (as defined in the Amended and Restated Intercreditor Agreement) to MHIL within five Business Days of demand by MHIL.

6 ARRANGEMENTS FOR UTILISATION OF FACILITY 6.1 As a condition subsequent to this Agreement, Parties shall execute the following documents

within six weeks of the date of this Agreement: (a) Documents in a form to the satisfaction of MHIAP, and subject to the consent of the

TuasOne Lenders, whereby:

(i) TuasOne, Hyflux, Hydrochem and MHIAP agree that TuasOne shall immediately pay to MHIAP all such drawdown proceeds as are for the purposes of payment of the amounts owing to MHIAP from time to time as set out at Clause 5.3 above, which TuasOne receives pursuant to the Facilities (as defined in the Amended and Restated Facility Agreement).

(ii) Hyflux is to provide MHI with pre-signed Utilisation Requests and pre-signed Withdrawal Notices (both terms as defined in the Amended and Restated Facility Agreement) in respect of all amounts to be paid to MHIAP under the EPC Contract (inclusive of all sums to be paid to MHIAP under this Agreement as set out at Clause 5.3 above) save for the amounts set out at Clauses 5.3(c) and 5.3(d) above as follows:

(A) Hyflux shall provide to MHI nine original pre-signed blank

Utilisation Requests, one corresponding to each of the remaining Milestone Payments under the EPC Contract, which provide that upon receipt by TuasOne of amounts stated in the Utilisation Requests, such amounts are to be immediately transferred from the Disbursement Account to an account of MHIAP’s designation; and

- 13 -

(B) Hyflux shall provide to MHI nine original pre-signed blank Withdrawal Notices one corresponding to each of the remaining Milestone Payments under the EPC Contract, which provide that upon receipt by TuasOne of amounts stated in the Utilisation Requests, such amounts are to be immediately transferred from the Disbursement Account to an account of MHIAP’s designation.

(iii) All Utilisation Requests and Withdrawal Notices shall be pre-signed by the

Hyflux Directors (as defined in the Shareholders’ Agreement). (iv) The said Utilisation Requests and Withdrawal Notices shall provide that upon

receipt of amounts stated in the Utilisation Requests, such amounts are to be immediately transferred from the Disbursement Account to an account of MHIAP’s designation.

(v) The said Utilisation Requests and Withdrawal Notices shall be held by MHI and

delivered to the TuasOne Lenders when each Milestone Event under the EPC Contract is achieved.

(vi) Each of Hyflux and TuasOne hereby irrevocably and unconditionally authorise

any MHI Director (as defined in the Shareholders’ Agreement) to insert any requisite information to complete the pre-signed Utilisation Requests and Withdrawal Notices and deliver the same to the TuasOne Lenders as and when each Milestone Event under the EPC Contract are achieved, provided always:

(A) The amount of a Milestone Payment claimed in each Utilisation

Request and/or Withdrawal Notice shall be subject to the applicable cap as set out in the Annex A to this Agreement; and

(B) The MHI Director who is authorized to insert the said requisite information shall have regard to TuasOne’s rights, including but not limited to the right of set-off under Clause 2.16(iv) of the Deed of Novation, and the right of withholding, deduction or set-off under Clauses 24.2.3, 24.2.5 and 39.9 of the EPC Contract respectively.

(b) Documents in a form to the satisfaction of TuasOne, whereby the Second-Ranking

Security shall be discharged in accordance with the terms of the Second-Ranking Security.

(c) Execution of and/or entry into the Second-Ranking Security Documents (as defined in

the Amended and Restated Facility Agreement).

7 TERMINATION

7.1 MHI shall be entitled to terminate this Agreement immediately in the event of any of the following occurring:

(a) This Agreement, the Deed of Novation and/or the novation pursuant to the Deed of

Novation is set aside, annulled, substantially varied and/or substantially modified by the courts;

(b) The WESA or the EPC Contract is terminated (except in the case of termination resulting

solely from a breach on the part of MHI);

(c) The TuasOne Lenders exercise their step-in rights under any agreement relating to the Project (except to the extent resulting solely from a breach on the part of MHI);

(d) The NEA exercises its step-in rights due to the occurrence of a Step-in Event A or a Step-

in Event C under the WESA (except to the extent resulting from a breach by the TuasOne

- 14 -

Lenders of any Finance Document (as defined in the Amended and Restated Facility Agreement) or solely from a breach on the part of MHI);

(e) TuasOne fails to make any payment to MHIAP under this Agreement or the EPC Contract

and such non-payment is not remedied within twenty-one (21) working days, save where such delay in making payment or non-payment arises from:

(i) Delays in the approval process for the disbursement of funds and/or the

withholding/non-disbursement of funds by the TuasOne Lenders to TuasOne under the Amended and Restated Facility Agreement, for TuasOne to make payment to MHIAP, save where Hyflux and/or Hydrochem have caused such delay in payment or non-payment; and/or

(ii) A default on the part of any of the MHI entities.

(f) Any material breach of this Agreement is committed by Hyflux, Hydrochem and/or HEPL

and such material breach is not remedied within 21 working days; and

(g) Any scheme of arrangement proposed by Hyflux, Hydrochem, HEPL and/or any of their related companies under Section 210 of the Companies Act (Cap. 50) seeks to make any of MHI a party to any such scheme of arrangement and/or excludes, modifies, restricts, varies or in any way prejudices, or have the effect of excluding, modifying, restricting, varying or prejudicing, any of MHI's rights.

7.2 The following shall survive any termination of this Agreement:

(a) Any release and discharge contained in Clauses 4.1(a) to 4.1(e), and any irrevocable

waiver that has come into force pursuant to Clauses 4.1(f) and 4.1(g), of this Agreement; and

(b) Clause 2.1 and 5.6 of this Agreement.

8 LEGAL PROCEEDINGS SIAC Arbitration

8.1 The EPC Sub-Contractor and Hydrochem shall withdraw their respective claims and counter-

claims in the SIAC Arbitration, and discontinue the SIAC Arbitration, in each case, with each party bearing its own costs, as soon as reasonably practicable after the execution of this Agreement. Any costs payable to the tribunal and to the SIAC in respect of the SIAC Arbitration shall be shared in the following proportions (i) 50% borne by Hydrochem, and (ii) 50% borne by the EPC Sub-Contractor.

SOPA Adjudication 8.2 MHI shall irrevocably waive and discharge the right to enforce the determination in the SOPA

Adjudication, by providing to Hydrochem written confirmation of the waiver and discharge of such right.

9 DEFAULT CALL OPTION 9.1 Without prejudice to anything else stated in this Agreement or the rights of MHI under the

Amended and Restated Facility Agreement, as long as this Agreement is in force, MHIL shall not exercise the Default Call Option for any of the following:

(a) Defaults, breaches or events that MHI knows of or is aware of at the date of this

Agreement and occurring before the date of this Agreement; and

- 15 -

(b) Defaults or breaches arising or as may have arisen out of the Hyflux Scheme and HEPL Scheme.

10 INTERACTION WITH SCHEME OF ARRANGEMENT

MHI's claims against Hyflux, Hydrochem or HEPL will not be subject to any scheme of arrangement to be proposed in respect of Hyflux, Hydrochem, HEPL and/or any of their related companies.

11 COSTS Each Party will bear its own respective legal and other costs incurred to date, including the costs of proceedings, disputes and inspections, including any costs incurred in connection with the SIAC Arbitration (but excluding, for the avoidance of doubt, the costs adjudicated as due to the EPC Sub-Contractor in the SOPA Adjudication and the costs order made in HC/SUM 2475 of 2018) and any costs incidental to the negotiation, preparation and execution of this Agreement.

12 AUTHORITY Each Party represents and warrants to the others with respect to itself that it has: (a) Full legal capacity to enter into this Agreement; and (b) Full right, power and authority to execute, deliver and perform all duties and obligations

under this Agreement.

13 NO ADMISSION 13.1 This Agreement is not, and shall not be represented or construed by the Parties as:

(a) An admission or agreement to apportionment of liability or wrongdoing on the part of

any Party to this Agreement or other person or entity in respect of the disputes or claims released and discharged, or liquidated damages or rights waived pursuant to this Agreement (collectively, the “Released Claims”);

(b) An acknowledgement of any Party’s claims to the Released Claims; and/or (c) A part payment in respect of any Party’s claims to the Released Claims.

14 FURTHER ASSURANCE

The Parties shall execute all such instruments and documents and do all such acts and things as may be necessary or desirable so that full effect may be given to the provisions of this Agreement.

15 ILLEGALITY The illegality, invalidity or unenforceability of any provision of this Agreement under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision.

- 16 -

16 VARIATIONS

16.1 No variation of this Agreement (or of any of the documents referred to in this Agreement) shall be valid unless it is in writing and signed by or on behalf of each Party. The expression "variation" shall include any amendment, supplement, deletion or replacement however effected.

16.2 Unless expressly agreed, no variation shall constitute a general waiver of any provisions of this Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to this Agreement which have already accrued up to the date of variation, and the rights and obligations of the Parties under or pursuant to this Agreement shall remain in full force and effect, except and only to the extent that they are so varied.

17 ENTIRE AGREEMENT This Agreement supersedes and cancels all previous deeds, agreements, representations, warranties and undertakings whether oral or written, express or implied, given or made by the Parties, including the Term Sheet, in respect of the matters set out herein, and shall constitute the entire agreement between the Parties in respect of the matters set out herein, and no further terms and conditions shall be included or implied. For the avoidance of doubt, this Clause shall not apply to the Deed of Novation, the Second-Ranking Security Documents or the amended and restated Finance Documents (as defined in the Amended and Restated Facility Agreement).

18 REMEDIES AND WAIVERS No failure on the part of any Party to exercise, and no delay on its part in exercising, any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

19 RESTRICTIONS ON ASSIGNMENT No Party shall nor shall it purport to assign, transfer, charge or otherwise deal with all or any of its rights or obligations under this Agreement nor grant, declare, create or dispose of any right or interest in it without the prior written consent of the other Parties to this Agreement.

20 CONFIDENTIALITY

20.1 The terms of this Agreement, the substance of, and any documents relating to, all negotiations in connection with this Agreement and details of the payment to be made under this Agreement are confidential to the Parties and, where applicable, their legal advisors, who shall not disclose them to, or otherwise communicate them to, any third party without the prior written consent of the other Parties other than: (a) To the Parties’ respective legal advisors, financial advisors, auditors, tax advisors and

insurers on terms materially similar to this Clause which preserve the confidentiality of this Agreement;

(b) Pursuant to an order of a court of competent jurisdiction or if and to the extent required by law, or pursuant to any proper order or demand made by any competent authority or a body to which a Party is under a legal or regulatory obligation to make such a disclosure, including but not limited to stock exchanges where a Party may be listed;

(c) By Hyflux and Hydrochem to each of their respective creditors;

- 17 -

(d) By MHI to Sub-contractors whose Sub-contracts (both terms as defined in the EPC

Contract) are transferred from Hydrochem to MHI; (e) By TuasOne to the TuasOne Lenders and the NEA; and

(f) As far as necessary to implement and/or enforce any of the terms of this Agreement.

20.2 The Parties are otherwise entitled to confirm the fact of, but not the terms of, the settlement of

disputes under this Agreement.

21 NOTICES

21.1 Any notice or other communication to be given by any Party to another under or in connection with this Agreement shall be in writing.

21.2 Unless otherwise stated in this Agreement and unless and until notified to the contrary, any notice or other communication to be given to any Party under or in connection with this Agreement shall be sent by electronic mail, by facsimile, by post or by delivering it by hand to the electronic mail address, facsimile number or address, as the case may be, of the relevant Party, as set out below:

- 18 -

21.3 Any such notice, demand or communication shall be deemed to have been duly given (if given

or made by facsimile and electronic mail) at the time of transmission or (if given or made by posting) 2 working days after posting if to a local address, and 7 working days after posting if to an overseas address, and in proving the same it shall be sufficient to show that the envelope containing the same was duly addressed, stamped and posted. Any notice or other communication which is served by hand shall be deemed to have been duly given when delivered.

21.4 This Clause 21 shall not apply to the service of any process or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution.

22 EQUITABLE REMEDIES

Without prejudice to any other right or remedies a Party may have, the Parties each acknowledge and agree that damages may not be an adequate remedy for any breach of this Agreement and the Parties shall be entitled, to the remedies of injunction, specific performance and other equitable relief (but for the avoidance of doubt no right of rescission or, unless expressly provided hereunder, termination) for any threatened or actual breach of this Agreement.

23 CONSEQUENTIAL LOSS

Neither party is liable to any other Party for special, consequential, or punitive damages or indirect losses, however caused (including by negligence), including loss of actual or anticipated profits, lost opportunities (including opportunities to enter into or complete arrangements with third parties), a failure to realise anticipated savings or loss of reputation.

24 COUNTERPARTS This Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart and each counterpart shall be as valid and effectual as if executed as an original.

25 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT A person who is not party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this Agreement, but this does not affect any right or remedy of a third party which exists or is available apart from the said Act.

26 GOVERNING LAW This Agreement and any dispute, controversy, proceedings or claim of whatever nature arising out of or in any way relating to this Agreement or its formation or validity (including any non-contractual disputes or claims) (each, a “Dispute”) shall be governed by, and construed in accordance with, the law of Singapore, and the Parties hereby submit to the exclusive jurisdiction of the courts of Singapore in respect of any and all Disputes.

- 19 -

Annex A

Milestone Event number

Milestone Payment amount (SGD)

35 6,000,000.00

36 NA

37 7,388,890.00

38 NA

39 5,000,000.00

40 8,694,440.00

41 8,694,440.00

42 17,388,890.00

43 17,388,890.00

44 34,777,780.00

45 195,485,375.03

(i.e. 313,000,000.00 less: (i) (78,600,000.00 - 25,000,000.00); (ii) 59,614,624.97; and (iii) 4,300,000)

lN WITNESS WHEREOF this Agreement has been entered into by the Parties on the date first writtenabove.

Signed for and on behalf of

MrsJM'/,",*;4"g.,Es.LrD.Name: Ao1HlRo YAqNULthDesisnation, H EA| oF' tilLqTE flf$f UNff

Witnessed by

Name: L<rr tr'4gt ur'E.JDesignation, Vs(rAc 6u,64oL

signed for and on behalf of7

MITSUBISHI HEAUT INDUSTRIES ASIA PACIFIC PTE. LTD.

Name: Jrnya t/f iteDesignation,

-Dife rTor

Witnessed by eName: !.o\4 t^^Er r"/L^,Designation'

".(rA, c.owyt6U

SIGNATURE PAGE TO SETTLEMENT AGREEMENTBETWEEN MHI, HYFLUX, HYDROCHEM, HEPL, TUASONE AND TEE

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J-'€- rt K,MITSUBISHI HEAUT INDUSTRIES ENVIRONMENTAL & CHEMICAL ENGINEERING CO., LTD.

Name: Y-o*o- Hi**-,"'Designation:


Witnessed by


HYFLUX LTD.

Name:Designation:

Witnessed by

Name:Designation

?Name: (rH t^.€, rrrSJDesignation: utrt,AL ravvJ13L

SIGNATURE PAGE TO SETTLEMENT AGREEMENTBETWEEN MHI, HYFLUX, HYDROCHEM, HEPL, TUASONE AND TEE

-21 -

545804-4-6-v4.0 7 17-40739547

Appendix F – Overview of Schemes

OVERVIEW OF ESTIMATED RETURNS UNDER THE SCHEMES 1

DATED 17 MARCH 2020

PARTIES VALUE OF

CLAIMS (APPROX.)2

SHARES IN HYFLUX POST-

REORGANISATION

CASH AND/OR EQUITY DISTRIBUTION (APPROX.)

ESTIMATED TOTAL RETURNS (APPROX.)

AVERAGE ESTIMATED PERCENTAGE RETURNS

PER CLAIMANT / SCHEME PARTY (APPROX.)

Settlement Date

Six (6) months after

RED 3

One (1) year after RED

Assuming TuasOne

reaches PCOD

18 months after RED

Two (2) years after RED

Thirty (30) months after

RED

Three (3) years after

RED

Forty-two (42) months after

RED

Four (4) years after RED

Investor – Utico FZC4

95%

Ordinary Shareholders of Hyflux 5%

HY

FL

UX

Unsecured Scheme Parties

Bank Lenders

S$706m5

S$84.9m

Pro-rata cash payout to all Unsecured

Scheme Parties from escrow upon Contingent

Claims being Extinguished

S$84.9m6 7 Pro-rata cash payout to all Unsecured

Scheme Parties from escrow upon Contingent

Claims being Extinguished

and/or Expired

S$250m plus interest on deferred amount at 1.5% per annum

~15.1%8

MTNs S$278m9

Other Claimants

S$143m10

Contingent Claimants

S$533m

S$40.1m placed in escrow

(to be

distributed upon a

Contingent Claim

becoming Crystallised)

S$40.1m5 6 placed in escrow

(to be

distributed upon a Contingent

Claim becoming Crystallised)

P&P Scheme Parties11

Perpetual Capital

Securities

+

Preference Shares

S$500m principal

+

S$400m principal

Op

tio

n 1

: 50% of each P&P Scheme

Parties’ Claim, up to

$1,500

S$50.0m less the aggregate amount of the Base P&P Claim Cash Payout

to P&P Scheme Parties who elect Option 2.

10% - 50% 12 13

Illustrative return based on an assumed level of election (or deemed

election) of Option 1 14

Op

tio

n 2

:

20%

of

50% of each P&P Scheme


$1,500 15

20%

of


Parties’ Claim, up

to$1,500 15

20%

of



$1,500 15

20%

of


Parties’ Claim, up to $1,500 15

+

Pro-rata equity distribution of Optional P&P Claims Share Consideration

20%

of



$1,500 15

+

20%

of

Pro-rata cash payout of

Optional P&P Claims Cash Consideration

16

20%

of



16

20%

of



16

20%

of



16

20%

of



16

S$50.0m less the aggregate amount of the Base P&P Claim Cash Payout to P&P Scheme Parties who elect or are deemed to have elected Option 1

+

Optional P&P Claim Cash Consideration, being either:

$50.0m* 17

OR

in the event that the share capital of the Investor (or an Affiliate of the

Investor) is listed on a stock exchange within two (2) years of the

Completion Date, the higher of S$50m; and the cash equivalent of

4% of the entire issued share capital of the Investor or Affiliate of the

Investor so listed*

+

Optional P&P Claims Share Consideration, being 3.5% of the entire issued share capital of the

Company*

*All amounts reduced pro-rata for the relative amount of P&P Scheme

Parties who elect Option 2

Up to S$1,500

+ 5.56% 12 14 16 18

+ ordinary share of 0.6 per

P&P Scheme Parties’ claim of S$1 19

Illustrative return based on

an assumed level of election of Option 2 20

Subordinated Scheme Parties S$112m 21

Nominal22 Nominal ≈ 0%

HY

DR

OC

HE

M

General Claimants S$39.74m23 S$4.45m

32.65% of Trade Creditors’

Payment

≈ S$4.44m24

Minimum return

Assuming TuasOne reaches

PCOD

Minimum return

Assuming TuasOne

reaches PCOD

S$4.45m S$8.89m

S$5,000 + ~8.5%

S$5,000 + ~20.0%

Subordinated Claimants S$392.7m 21 Nominal Nominal ≈ 0%

HM

M

General Claimants S$21.25m S$2.88m

17.35% of Trade Creditors’

Payment

≈ S$2.36m24

S$2.88m S$5.24m S$5,000 + ~10.6%

S$5,000 + ~22.1%


HE

General Claimants S$13.88m S$2.67m S$2.67m S$5,000 + ~16.9%


1 In the event of any inconsistency between the content of this document and the terms of the relevant proposed Scheme of Arrangement, the latter shall prevail. 2 These approximations are based on the adjudication of Proofs of Claim in March 2019 and any known changes since then. There may be further changes subject to the outcome of the adjudication results following the Notice to File Proof of Claim dated 9 January 2020. 3 Refer to Restructuring Effective Date. 4 Utico FZC will be investing through a special purpose vehicle, and the shares will also be distributed to co-investors other than Utico FZC. 5 Inclusive of loan by KfW IPEX GmbH of S$146 million (approx.) to Hydrochem which is guaranteed by Hyflux based on the adjudication exercise in March 2019. 6 Interest of 1.5% per annum to be added. 7 Amounts will change depending on the amount of Contingent Claims which during the first 18 months become Crystallised or Extinguished. 8 Assuming all the Contingent Claims Crystallise and are paid out. The return per Claimant increases with each Contingent Claim becoming Extinguished or an Expired Contingent Claim. 9 S$265 million Principal + S$13 million (approx.) accrued Interest based on adjudication exercise in March 2019 and may be amended if there are changes to the adjudication results following the Notice to File Proof of Claim dated 9 January 2020. 10 Inclusive of crystallised debt of S$142 million (approx.) from bonds and guarantees that have already been called since November 2018 and minor trade debt of an aggregate sum <S$900k. 11 Any P&P Scheme Party who holds both Perpetual Capital Securities and Preference Shares will be treated as a single Debt Securities Scheme Party for the purposes of the Hyflux Scheme. 12 Assume P&P Scheme Parties who each hold less than S$15,000 in aggregate value of Perpetual Capital Securities and/or Preference Shares will elect or be deemed to have elected Option 1. 13 The calculation of average estimated percentage return per claim is based on information extracted from the CDP records. 14 Assuming P&P Scheme Parties who in aggregate hold a total of S$150 million of Perpetual Capital Securities and/or Preference Shares (approx.) will elect or be deemed to have elected Option 1. 15 Simple interest shall accrue on any portion of the Base P&P Claim Cash Payout that remains outstanding after the Settlement Date at a rate of 1.25% per annum, and shall be paid together with each instalment that falls due after the Settlement Date 16 Simple interest shall accrue on any portion of the Optional P&P Claim Cash Payout that remains outstanding on the date falling two (2) years after the Restructuring Effective Date at a rate of 1.25% per annum, and shall be paid together with each instalment that falls due after the date falling two (2) years after the Restructuring Effective Date 17 Provided that (i) in the event the Investor (or an Affiliate of the Investor) has not been listed on a stock exchange within two (2) years of the Completion Date (“Listing End Date”) but a listing application in respect of the same is submitted on or prior to the Listing End Date; and (ii) the listing of such shares occurs within six (6) months of the Listing End Date, the Optional P&P Claim Consideration shall be increased by an amount equal to the positive difference between the Listing Amount and S$50 million. There shall be no increase if the entire issued share capital is equal to or less than S$50 million. 18 Assume P&P Scheme Parties who each hold more than S$15,000 in aggregate value of Perpetual Capital Securities and/or Preference Shares will elect Option 2. 19 Total number of ordinary shares that each P&P Scheme Party is entitled to shall be rounded down to the whole number. 20 Assuming P&P Scheme Parties who in aggregate hold a total of S$750 million of Perpetual Capital Securities and/or Preference Shares (approx.) will elect Option 2. 21 The claims of Subordinated Scheme Parties and Subordinated Claimants are estimated based on the cut-off date i.e. 30 September 2019 which do not include contingent claims, if any. There may be further changes subject to the outcome of the adjudication results following the Notice to File Proof of Claim dated

9 January 2020. 22 S$1 per Subordinated Scheme Party. 23 On the assumption that certain trade creditors have been novated from Hydrochem to MHI under the MHI Settlement Agreement. 24 From Hydrochem’s expected payment to be received from MHI following TuasOne PCOD after making necessary deductions as per the terms of the MHI Settlement Agreement.

545804-4-6-v4.0 8 17-40739547

Appendix G – Liquidation Analysis

Reliance Restricted

15 January 2020

Private and confidential

Hydrochem (S) Pte LtdLiquidation Analysis – Estimated

Realisation Outcomes

This Document is prepared solely for Hyflux Ltd. We accept no responsibilityor liability to any person other than to Hyflux Ltd, and accordingly, if suchother persons choose to rely upon any of the contents of this Document theydo so at their own risk.

[XX] 2018Any person intending to read this document should first read this letter

Private and Confidential

Hyflux LtdHyflux Innovation Centre

80 Bendemeer Road

Singapore 339949

Dear Sirs,

Project Phoenix

Ernst & Young Solutions LLP (“EY”) has been engaged by Hyflux Ltd (“Hyflux”) and

its subsidiaries (collectively “Hyflux Group”) as financial advisor in relation to the

restructuring of the Hyflux Group (the “Transaction”), in accordance with the

engagement agreement dated 14 May 2018 (the “Engagement Agreement”).

Purpose of Document and restrictions on its use

This document (“Document”) was prepared for Hyflux in relation to providing a basis

for the Hyflux Group to have a discussion with its creditors regarding a restructuringproposal. It should not be used or relied upon by any other party.

This Document and its contents are private and confidential and information

contained herein includes non-public and market sensitive information concerningthe Hyflux Group, and may not be quoted, referred to or shown to any other parties

without our prior written consent.

We accept no responsibility or liability to any person other than to Hyflux, andaccordingly if such other persons choose to rely upon any of the contents of this

Document they do so at their own risk.

Nature and scope of the services

The nature and scope of the services, including the basis and limitations, are

detailed in the Engagement Agreement.

Our work in connection with this engagement is of a different nature to that of an

audit or a review of information, as those terms are understood in any applicableauditing standards.

In preparing this Document, we have relied on the records of the Hyflux Group and

discussions with parties involved in the Transaction, including the Hyflux Group’smanagement (“Management”), key employees and Hyflux’s legal advisors. The

information we have received is the responsibility of Management. We have not

sought to establish the reliability, accuracy or completeness of the information given

to us nor have we undertaken an audit of the information. Consequently, we give noassurance on such information.

Our work contained within this Document was completed on 4 July 2019. Therefore,

the Document does not take account of events or circumstances arising after 4 July2019 and we have no responsibility to update the Document for such events or

circumstances.

Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liab ility Partnerships Act (Chapter 163A).

A member firm of Ernst & Young Global Limited

Ernst & Young Solutions LLP

Transaction Advisory services

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Tel: +65 6535 7777

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Mailing Address:

Robinson Road

PO Box 384

Singapore 900734

15 January 2020

A member firm of Ernst & Young Global Limited

Management has been provided with a copy of this report and have confirmed itsfactual accuracy. The report was approved for release on 15 January 2020.

Prospective financial information (“PFI”)

Please note that any prospective financial information (“PFI”) presented in thisDocument is based on Management’s assumptions regarding future events, which

may or may not occur as assumed and consequently, the actual results achieved

may materially differ from those as presented in this Document. We take no

responsibility for the achievement of projected results.

Except as otherwise noted, we have not analyzed or commented on macroeconomic

or geopolitical conditions that could impact the PFI. We have not provided anyopinion, conclusion or any type of assurance about specific assumptions or

components of the PFI or on the PFI as a whole.

References to EY in the Document will relate to our analysis and will not indicate

that we take any responsibility for the information concerned or are assembling or

associating ourselves with any financial information including prospective financial

information. Hyflux is solely responsible for any decision to execute or implementany such advice or recommendation, the actual execution or implementation or any

thereof, the sufficiency of such advice or recommendation for your purposes, and

the results of such implementation.

Yours faithfully

Ernst & Young Solutions LLP

Page 4

Abbreviations

Debt Restructuring Exercise Court supervised process to reorganize the liabilities and businesses of Hyflux Ltd and its subsidiaries i.e.

Hydrochem (S) Pte Ltd, Hyflux Engineering Pte Ltd, Hyflux Membrane Manufacturing (S) Pte Ltd and Hyflux

Innovation Centre Pte Ltd

EPC Engineering, Procurement and Construction

Group Hyflux Ltd and its subsidiaries

High case Liquidation scenario, high estimated asset realizations

Hydrochem Hydrochem (S) Pte Ltd

JV Joint Venture

Low case Liquidation scenario, low estimated asset realizations

m Million

PPE Property, plant and equipment

S$ Singapore Dollar


Page 5

Liquidation scenario analysis – Hydrochem Estimated returns


Estimated returns –

assumed insolvency date of 30 September 2018

(Unit: S$’m)

Low case High case Notes

Estimated

realizable

value

Estimated

realization

rate

Estimated

realizable

value

Estimated

realization

rate

Total realizable assets

Less: preferential claims

Employee claims

Liquidators’ expenses, fees and disbursements

Available to unsecured creditors

Unsecured creditors

Bank creditors

Contingent creditors

Trade and other creditors

Total unsecured creditors

4

(8)

(1)

-

146

911

597

1,654

8

(8)

(1)

-

146

911

597

1,654

Note 1

Note 2

Note 3

Estimated recovery for unsecured creditors Nil Nil

Surplus/ (Shortfall) to unsecured creditors (1,676) (1,676)

Surplus to shareholders - -

Note- the recoveries detailed above set out the estimated potential recoveries for unsecured creditors including crystalised contingent creditors.

Page 6

Liquidation scenario analysis – Hydrochem Estimated returns - notes


1. Total Realizable Assets

► Please note that these returns represent amounts received by Hydrochem only. Returns shown are primarily due to realizations fromother assets including intercompany receivables and income tax receivables.

2. Preferential claims

► Pursuant to Section 328 of the Singapore Companies Act, the costs and expenses of the winding up including taxes and liquidator’sexpenses, fees and disbursements shall be paid in priority to all other unsecured debt.

► The estimated employee claims of approximately S$8m is based on the assumption of early termination of employees upon liquidationand this claim amount is updated based on the employee salary and headcount information as at March 2019.

► Liquidators’ expenses, fees and disbursements have been estimated to cover fees and expenses of the liquidator up to the dissolutionof the liquidation, including the estimated costs of any retained employees to oversee the asset realizations. However, the liquidators’expenses do not take into account professional fees of external parties. We assume that there are no complex matters required to behandled by the liquidator during the process of liquidation.

3. Unsecured creditors

► The unsecured creditors refer to the bank creditors, contingent creditors, trade creditors and other creditors. The liquidation analysiswas performed based on the available position of liabilities at the time of preparation of this analysis dated 4 July 2019:

► Trade and other liabilities as at 30 September 2018; and

► Financial liabilities have been updated to 24 May 2019 (based on the occurrence of certain known events since 30 September2018).

Page 7

Liquidation scenario analysis – Hydrochem Other important matters to note (1/3)


Purpose of this

analysis

► This Document is an updated liquidation analysis report.

► Our analysis has been prepared solely for Hyflux Ltd for the purpose of the Debt Restructuring Exercise. Theanalysis details the estimated realizations from a theoretical liquidation scenario of Hydrochem.

Approach of this

analysis

► The analysis has been prepared on a ‘bottom-up’ basis where liquidation or sales of assets occur at each individualstandalone entity. This approach takes into account the intercompany flows within the Group which will be importantto the ultimate return to Hydrochem. In this analysis, recoveries to the creditors of Hydrochem includes the valuerecovered from its subsidiaries (including outside of Singapore in a number of cases). Additional analysis wasperformed to further consider the estimated realization values derived from material projects (including outside ofSingapore in a number of cases) which may be available to Hydrochem.

► In our analysis we have taken into account some of the standard practices (i.e. the likelihood of repayments fromlocal debtors, the ability of an overseas liquidator to enforce security (where relevant) upon local entities and theease of repatriating cash) that are specific to certain jurisdictions that could possibly have an impact on the ultimateliquidation returns of Hydrochem.

► The data underpinning this analysis has been provided by Hydrochem management. No audit procedure nor duediligence has been conducted on this data and it has not been verified for completeness and accuracy. This analysisalso relied on legal advice on the rights and obligations of available relevant agreements provided by Hydrochem.

Estimated returns

to unsecured

creditors

► The estimated total return to unsecured creditors in a liquidation scenario is nil recovery in both Low case and Highcase, based on the assumptions detailed in this analysis. We consider that returns to creditors (preferential claimsonly) could take up to 5 years to deliver given the market norms in dealing with the complex and multi-jurisdictionalstructure of the Group.

Page 8



Overarching

assumptions

The overarching key assumptions that underpin our analysis are as follows:

1. Insolvency date as at 30 September 2018

► The analysis is based on the balance sheet as at 30 September 2018 (proxy to the moratorium date of 22 May

2018 and being the latest unaudited publicly available consolidated financial statements). Where possible, we

have reflected the updated balances based on certain known material events up to 4 July 2019 resulting in an

increase in liabilities since 30 September 2018 (e.g. the calling of performance bonds, proof of debts from the

adjudication exercise in March 2019 and restructuring costs incurred up to 24 May 2019). As such, any other

events post the assumed liquidation date are not considered in the analysis.

► The analysis does not include intercompany realizations from associates and JVs within the Group.

2. Impact of Hyflux Ltd’s liquidation

► Upon commencement of liquidation of Hyflux Ltd who is the ultimate holding company of the Group, many of the

other Group entities (including Hydrochem and the EPC business generally) are also assumed to enter

liquidation on or around the same time. Consequently, we also assume that construction activities on projects

would immediately cease.

3. Employees

► Most of the employees would have their contracts of employment terminated immediately upon liquidation. We

assume only a small base of skeleton staff would be retained by the liquidator to assist with the realization of

assets.

4. Material asset owning entities / investments

► We have assumed that certain asset owning entities / investments which do not require financial support from

Hyflux Ltd, are not placed into liquidation and are instead realized through the sale of shares via an orderly sale

process.

Page 9



Overarching

assumptions

(continued)

5. Debt profile

► All debt in Hydrochem is unsecured. Only the bank facilities, performance bonds and certain other liabilities are

guaranteed by Hyflux Ltd.

► In addition to the liabilities reflected on the balance sheet, Hydrochem also has off balance sheet exposure to

corporate guarantees and/or performance bonds relating to certain EPC works. It has been assumed that all of

these contingent liabilities have crystallised.

6. Adjustments to estimated recoveries

► Where assets are held in challenging or complex jurisdictions, we have applied a discount to the likely

recoverability. However, specific local insolvency laws in jurisdictions that may prove challenging to repatriate

cash, have not been examined in further detail.

► The available cash as at 30 September 2018 has been assumed to be partly used for operational purposes,

with 20% of the balance available for creditors. Any amounts held in fixed deposit / reserve accounts are

assumed to be set off in full against the bank creditors’ unsecured claims.

► The balance sheet contains multiple items such as PPE, stocks, prepayments, trade and other receivables and

these items are assumed to be realized in a range of 0%-20%. Please note that trade and other receivables

relate to third party receivables.

Assumptions –

Low case

► The Low case estimates returns to unsecured creditors where liquidation or sales of assets occur at each individualstandalone entity and we assume that the environment in which the liquidator is trying to realize value from theassets / investments is very challenging.

► The Low case also includes forced sales on certain assets necessitated by the absence of working capital facilitieswhich reduces a liquidator’s ability to transact for maximum value.

Assumptions-

High case

► The High case has factored a greater stability into the liquidation process as a whole, largely the key assets /investments could be realized at a higher value.

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