The Singaporean owners of the Basslink cable that links Tasmania’s electricity grid to the mainland have put the business into administration rather than pay at least $40m it owes the state and Hydro Tasmania due to an outage in 2015.
In a statement to the Singapore stock exchange, Keppel Infrastructure Trust said there was “no contractual recourse to KIT under the financing arrangements currently in place for the Basslink interconnector”.
An arbitrator ordered the companies in the Basslink group to pay Tasmania $40m in December last year after finding in favour of the state and state-owned Hydro Tasmania in a dispute over the cause of the 2015 outage, which lasted six months and forced the government to ship in diesel generators.
The total claim against Basslink brought by the state and Hydro Tasmania is at least $70m, although KIT said Basslink disputed “the basis and quantum” of $33.3m of this figure.
After the arbitration, the state and Hydro Tasmania agreed to pause pursuing the debt while KIT attempted to refinance Basslink, but the standstill agreement expired on 27 October.
On the same day, a deal to sell the cable to infrastructure company APA Group was reported to have fallen over.
Tasmania and Hydro Tasmania appear to have little prospect of getting paid much of what they say they are owed because their claims rank behind a syndicate of banks led by NAB that is believed to be owed about $600m.
Basslink appointed Adam Nikitins, Stewart McCallum and Colby O’Brien, from accounting firm EY, as administrators on Friday.
After this, the banking syndicate appointed Peter Gothard, Peter McCluskey and Brendan Richards from KPMG as receivers and managers.
The receivers have “day to day control of Basslink’s operations,” KPMG said in a statement.
“I want to reassure our stakeholders and the community that Basslink’s business will continue to operate as usual and there will be no disruption to the operations of the interconnector or communications as a result of this appointment,” Gothard said.
“We look forward to working pro-actively with all stakeholders, including the Tasmanian government and Hydro Tasmania, to establish a pathway to restructure the business.”
The Basslink chief executive said the group “always worked in good faith to progress the implementation of the arbitration awards and to progress the matters under the standstill agreement, which included engaging the state and Hydro Tasmania with several proposals for a resolution of issues and proposed repayment plans”.
“Regrettably, against the backdrop of many issues and having exhausted options, Basslink needed to take proactive action to put Basslink in the best possible position to navigate forward through these challenges,” he said.
KIT said the collapse would have no effect on the amount it paid unitholders.
“Given that there is no contractual recourse to KIT under the financing arrangements currently in place for the Basslink interconnector and KIT does not rely on Basslink’s cash flows for distributions, the abovementioned update is not expected to have any material financial impact on the distribution per unit of KIT for the financial year ending 31 December 2021,” it said in its statement to the SGX.
