Bank lenders group get green light to file application to appoint judicial managers over Hyflux

Hyflux's debt moratorium has been extended from July 30 until the hearing date.
Hyflux's debt moratorium has been extended from July 30 until the hearing date.PHOTO: ST FILE

SINGAPORE - A group of bank lenders has succeeded - on their second try - to get the High Court's approval to file an application to put Hyflux under judicial management after two years of restructuring still left the water treatment firm's creditors high and dry.

High Court Justice Aedit Abdullah on Monday (July 27) granted the application by an unsecured working group (UWG) of banks comprising Mizuho, KfW, Bangkok Bank, BNP Paribas, Standard Chartered Bank, CTBC Bank and the Korea Development Bank to be carved out of Hyflux's debt moratorium, which gives it court protection from creditors.

He allowed these creditors, which argued that there was still no viable and binding restructuring plan, to file an application by Aug 7 to appoint judicial managers over Hyflux.

But Securities Investors Association (Singapore), or Sias, chief David Gerald said that this "does not necessarily mean JM is inevitable" as this is yet to be decided by the court.

A hearing date has not been set for the judicial management application. Hyflux's debt moratorium has been extended from July 30 until the hearing date.

Lawyers for UWG, which say the group now collectively hold more than $900 million of debt, had first applied for a carve-out in May last year, but failed. But Justice Aedit said then that the application could be revived if circumstances change.

"A moratorium is meant to be a temporary solution to allow a company to put something together... but it doesn't mean I can give a blank cheque for the moratorium going forward," he said at a hearing last May.

On Monday, he granted an application by ESR-Reit to be carved out of the moratorium. This will take effect in six weeks from Sept 7, on condition that rent for the intervening six-week period is paid by Hyflux Membrane to ESR-Reit by Aug 3, Hyflux said. 

Several potential suitors for Hyflux have surfaced in recent weeks, including one on Sunday - an unnamed North America-based fund manager that has a "strong" track record of investing in infrastructure, technology and real estate globally. Other potential investors included Middle Eastern utility firm Utico, Pison Investments, Unilegend Investments and Aqua Munda.

"Hopefully, between now and the hearing date of the JM application, some of the offers will close," a source close to the matter said.

An invitation memorandum was issued earlier this month from Pison, a Singapore-incorporated investment vehicle for Indonesian magnate Johnny Widjaja, who is interested to invest up to $300 million in Hyflux, including buying up the existing debt of the senior unsecured creditors.

 
 

Pison said that $200 million of Mr Widjaja's funds in Bank Mandiri (Persero) have been "irrevocably blocked and reserved" until July 10, 2021, for the investment.

In a July 25 affidavit asking the court to extend Hyflux's debt moratorium, Mr Widjaja said "Pison's invitation advisor has been receiving calls and e-mail enquiries from eligible creditors on an almost daily basis. This indicates that there are eligible creditors who see the invitation memorandum as a viable plan."

The expiration deadline for eligible creditors to submit their tender application forms is Aug 17, and the acceptance deadline is Sept 25. "Subject to the terms of the invitation memorandum, Pison intends to complete the purchase of the accepted bids by late October this year," he said.

 
 

He added that Pison will engage with holders of the Hyflux perpetual securities and preference shares (PnP) through Sias after the close of the invitation memorandum.

Mr Gerald said: "There is still time for serious offerors to table concrete offers. Aqua Munda and Pison, which stated that they would make an offer to the PnP holders, (should) do so on an urgent basis. Hyflux should confirm as soon as possible whether it will accept the revised Utico deal and call a scheme meeting in the near future."