SINGAPORE - Alleged differences within the Hyflux board over advisers' fees, board representation and management oversight were cited by potential white knight Utico as reasons why the restructuring deal has not been signed by the embattled water treatment firm.
Utico's statement on Thursday (Aug 29) came after Hyflux issued a clarification near midnight (Aug 28), saying the "definitive agreement has not been entered into by both parties, pending resolution on certain final outstanding issues in the draft definitive agreement".
Hyflux further clarified that both parties are, however, in "highly advanced discussions and will continue to engage with each other with a view to resolving such final outstanding issues and finalising and entering into the definitive agreement as soon as possible".
The UAE utility had said on Tuesday it "signed and released" a restructuring agreement with Hyflux on Aug 26 that will give it 88 per cent of the water firm.
But on Thursday evening, Utico backpedalled on the statement. It said that it "already has creditors' approval for the restructuring agreement, which we consider a very significant development paving the way for a rescue deal for Hyflux".
When asked on Thursday why Utico said there was a signed deal, chief executive Richard Menezes said: "Because August 26 was the deadline and creditors, note holders had accepted the restructuring agreement."
The utility said the "outstanding issues... predominantly refers to internal board level issues of Hyflux, probably including differences over advisors' fees, which Utico has capped at S$25 million in the restructuring agreement".
"It is prudent that a swift resolution is found so that Utico and Hyflux can endeavour to mitigate... value erosion of the entity," Mr Menezes said.
Mr Menezes added that Utico is "reinforcing (its) commitment to the Hyflux retail perpetual securities and preference (PNP) shareholders, whom he said could get "$50 million minimum to $150 million on the high side depending on the options they choose".
The restructuring agreement would be a "first-of-its-kind proposition in the world where retail investors who are otherwise unsecured and have no mandatory cover to recover their investments have been integrated into the agreement with pay-out guarantees", he said.
But Mr Menezes warned that apart from "whittling down Hyflux value steeply, a delay in resolution will also be detrimental to the PNP (shareholders) who would stand to lose all their investments if Hyflux's indecision leads to ultimate liquidation".