Basslink Enters Voluntary Administration

SGX announcement – Keppel Infrastructure Trust, 12 November 2021

ANNOUNCEMENT VOLUNTARY ADMINISTRATION OF SUBSIDIARIES

Further to the announcement made by KIT on 27 October 2021 in relation to the expiry of the standstill agreement between an indirect wholly-owned subsidiary of KIT, Basslink Pty Ltd, State of Tasmania and Hydro Tasmania (“Previous Announcement”), Keppel Infrastructure Fund Management Pte. Ltd. (the “Trustee-Manager”), acting in its capacity as trustee-manager of Keppel Infrastructure Trust (“KIT”), wishes to announce that companies in the Basslink group (“Basslink”)1 have today entered voluntary administration, with the directors of the respective Basslink companies appointing Adam Nikitins, Stewart McCallum and Colby O’Brien from Ernst & Young as voluntary administrators. Basslink has issued a media statement in connection with the foregoing, which is attached to this announcement.

The Basslink companies are incorporated in Australia and their principal business is the operation of a subsea electricity interconnector. Basslink owns, amongst other things, the Basslink Interconnector, being the interconnection between the present Tasmanian and Victorian electricity grids via a high voltage direct current submarine cable across Bass Strait. Basslink also wholly-owns Basslink Telecoms Pty Limited, which offers a range of wholesale transmission services between Tasmania and Victoria.

Further to the Previous Announcement, Basslink had been reviewing its position and options, and had also reached out separately to the State of Tasmania, Hydro Tasmania and National Australia Bank Limited (as agent for the lenders), respectively, in connection with the following:

(a) the arbitration award in the amount of approximately AU$39.5 million (including interest) and costs awarded in the amount of approximately AU$7.2 million which is currently due and payable by Basslink to the State of Tasmania in view of the expiry of the standstill agreement;

(b) letters of demand received by Basslink from Hydro Tasmania on 28 October 2021 demanding payment for:

(i) approximately AU$33.3 million under the Basslink Services Agreement between Hydro Tasmania and Basslink, the basis and quantum of which is disputed by Basslink; and

(ii) approximately AU$25.3 million in respect of arbitration costs awarded to Hydro Tasmania; and

(c) forbearance from the lenders under the forbearance deed poll dated 29 October 2021 in relation to enforcement of the lenders’ rights in respect of an event of default under the financing arrangements currently in place for the Basslink Interconnector.

Basslink has 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 of Tasmania and Hydro Tasmania. KIT and/or Basslink made several proposals for a resolution of issues and offered several proposed repayment plans for the arbitration award payments. However, as a result of the cessation of discussions with APA Group with respect to the proposed sale of Basslink and the ongoing disputes with Hydro Tasmania, after due consideration, and in light of the foregoing matters, the directors of the respective Basslink companies decided to place Basslink under voluntary administration. KIT understands that the decision was taken with the long-term interests of Basslink’s creditors, employees and other stakeholders in mind.

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.

KIT will make further announcements as appropriate, if and when there are material developments which warrant disclosure.

BY ORDER OF THE BOARD KEPPEL INFRASTRUCTURE FUND MANAGEMENT PTE. LTD. (Company Registration No: 200803959H) As Trustee-Manager of Keppel Infrastructure Trust

Darren Tan Company Secretary 12 November 2021

1 The Basslink group companies that have entered administration are: Coral Holdings Australia Pty Ltd, Nexus Australia Management Pty Ltd, Nexus Investments Australia Pty Ltd, Basslink Australia GP Pty Ltd, Basslink Pty Ltd and Basslink Telecoms Pty Ltd.

Media statement – Basslink, 12 November 2021

Basslink Enters Voluntary Administration

Companies in the Basslink group1 (Basslink) have entered voluntary administration, with the directors of those companies appointing EY representatives Adam Nikitins, Stewart McCallum and Colby O’Brien as voluntary administrators.

Basslink owns and operates an HVDC interconnector connecting Tasmania to the national electricity market. The interconnector enhances security of supply on both sides of Bass Strait; assists in protecting Tasmania against the risk of drought-constrained energy shortages while providing Victoria and southern states with secure renewable energy during times of peak demand. The Basslink Interconnector is one of the world’s longest submarine power cables and amongst the best performing HVDC Interconnectors globally, when benchmarked against other systems by CIGRE.

Basslink Chief Executive Malcolm Eccles said that while today’s decision was difficult, it was made with the long-term interests of Basslink, its creditors and employees in mind. It follows ongoing disputes with its customer Hydro Tasmania and an unsuccessful sale process with APA.

“Basslink has operated in a highly challenging environment for some time,” said Mr Eccles.

“Given the issues as a result of the cessation of discussions with APA and the ongoing disputes with Hydro Tasmania, it felt that Administration was the best way to effect change while protecting all stakeholders.

“Basslink emphasises that it has always worked in good faith to progress the implementation of the arbitration awards and to progress the matters under the Standstill Agreement, which 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.”

“We know this is a challenging time for our small team and their wellbeing will continue to be at the front of our minds throughout the voluntary administration process,” said Mr Eccles.

“The Basslink Interconnector continues to operate efficiently and reliably, connecting Tasmania to the national electricity market. We continue to serve the communities of Tasmania and Victoria, providing a reliable and sustainable source of energy.”

Mr Nikitins said that the administrators will undertake a preliminary review and assessment of the Basslink’s operations.

“Over the coming weeks we will be seeking to assess the best options for the business with a view to restructuring it for a more sustainable future,” said Mr Nikitins.

Dean Winter MP, Shadow Energy Minister, 12 November 2021

Barnett must reassure energy security

Just over two weeks since Energy Minister Guy Barnett announced the end to the standstill agreement with Basslink owner Keppel, the company has gone into administration.

Shadow Energy Minister Dean Winter said Tasmania’s energy security has not been under a cloud like this since 2016, when the Liberals almost blacked out the state.

“Minister Guy Barnett’s handling of this issue must come into question,” Mr Winter said.

“Tasmanian consumers and business need confidence in Tasmania’s energy security infrastructure.

“Yet we have Minister Guy Barnett committed to mothballing the Tamar Valley power station and suing the operator of our energy link to the mainland.

“Today’s announcement just shows how poorly energy security has been managed throughout this government’s time in office.

“Minister Guy Barnett must provide reassurance to Tasmanian industry and business that Basslink will remain available.”

Media release – Hydro Tasmania, 12 November 2021

Basslink voluntary administration

Hydro Tasmania is aware of the announcement by Keppel Infrastructure Trust today that Basslink Pty Ltd (BPL) and related entities have entered voluntary administration.

Under the Basslink contracts there is a framework which enables the Basslink interconnector to continue to operate through this process.

Hydro Tasmania’s energy in storage is at 52.6 per cent, which is a very secure position, well above the High Reliability Level.

Media release – Guy Barnett, Minister for Energy and Emissions Reduction, 12 November 2021

Tasmania’s energy security on a healthy footing

The Tasmanian Government notes the statement from Keppel Infrastructure Trust to the Singapore Stock Exchange that Basslink Pty Ltd (BPL) has entered voluntary administration.

The Basslink contracts contain provisions which enable the Basslink interconnector to continue to operate through this process, connecting Tasmania to the national electricity market.

Basslink itself has outlined today that “…the interconnector continues to operate efficiently and reliably, connecting Tasmania to the national electricity market. We continue to serve the communities of Tasmania and Victoria, providing reliable and sustainable source of energy”.

The Government does not apologise for pursuing the outcomes of the 2020 arbitration to protect the interests of Tasmanians, as money owed to the State and Hydro Tasmania is ultimately owed to the people of Tasmania.

Our State’s energy security remains on a very firm footing and in fact it has never been more secure.

This security is underpinned by our Hydro storage levels which, as of this week, sits at a healthy 52.6 per cent –this highest level since 2014. Following the Cattle Hill and Granville Harbour wind farms coming on line late last year, Tasmania became the first jurisdiction in Australia to be 100 per cent self-sufficient in renewable electricity and we’re building on this nation-leading momentum, having legislated to double our renewable energy capacity to 200 per cent by 2040.

The Energy Security Risk Response Framework, which the Government put in place in legislation, by way of amendments to the Energy Co-ordination and Planning Act 1995, is clearly working effectively.

Under the Framework, the Tasmanian Economic Regulator performs the role of Monitor and Assessor for Energy Security and is responsible for monitoring storages with its most recent dashboard providing a clean bill of health.

Tasmanians should be reassured that our energy security is stronger than ever and that the Government will always act in the best interests of Tasmanians.

The Tasmanian Government and Hydro Tasmania will now engage with Basslink’s financiers and administrators.

Tasmanian Times