The High Court has granted Hyflux a six-month lifeline to stave off its creditors.
Now the struggling water project firm must find a buyer for its stake in the giant Tuaspring asset and seek offers from rescue financiers.
Hyflux is seeking to raise about $200 million in rescue financing after the court yesterday granted it a six-month reprieve from creditors to work out a survival plan and reorganise its debts.
Without the debt moratorium, Hyflux would "run out of cash in the next four to five weeks", WongPartnership partner Manoj Sandrasegara told the court.
Hyflux's bank debt is $1.84 billion. That excludes $265 million in outstanding medium-term notes, $400 million in outstanding retail perpetual preference shares and $500 million in retail perpetual securities.
Hyflux and its units under the moratorium had a cash balance of just $18.6 million as of June 4. That represents a net cash outflow of $300,000 since May 18.
Hyflux founder Olivia Lum did not attend yesterday's hearing, but wrote in a June 14 affidavit that if the firm can get a $200 million cash injection, it would help fund construction at Hyflux's ongoing TuasOne and Qurayyat projects. It would also assist it to secure new projects.
Hyflux's bank debt, excluding $265 million in outstanding medium-term notes, $400 million in outstanding retail perpetual preference shares and $500 million in retail perpetual securities.
Cash balance of Hyflux and its subsidiaries under the moratorium, as of June 4. That represents a net cash outflow of $300,000 since May 18.
Hyflux is in preliminary talks with 27 potential financiers. If these express concrete interest after having seen limited data about Hyflux, they will proceed to more advanced talks, said Ms Lum.
Hyflux estimates that it will cost $132 million to complete the TuasOne waste-to-energy plant in May next year. It will then enjoy a net cash inflow of $291 million.
The Qurayyat desalination project in Oman is expected to cost US$28 million (S$38 million) to complete. Hyflux will get a net cash inflow of US$5.6 million once commercial operations commence in September.
The six-month lifeline gives Hyflux's interested rescuers the time to "get their act together" and arrange a $200 million syndicated loan, Mr Sandrasegara said. Such a loan may be disbursed over time as milestones are reached, he added.
Another priority for Hyflux is the sale of the Tuaspring Integrated Water and Power Project - its largest but loss-making asset that will be returned to national water agency PUB in 2038. Hyflux is in talks with four parties on a possible sale, Ms Lum wrote, noting that it could "be divested at a price around or above its present $1.3 billion book value".
Although Tuaspring had been put on the market last year, low power prices then meant it would not have served Hyflux's stakeholders to accept the early bids, she wrote.
If Tuaspring is sold at book value or higher, Hyflux would have about $900 million left after paying off secured project finance lender Maybank, Ms Lum wrote. That money could be used to settle other debt.
Maybank is Hyflux's largest secured creditor. The moratorium granted yesterday did not extend to Tuaspring. The court will hear Tuaspring's application for a separate moratorium in two weeks.
Hyflux has 29 bank lenders. Among the six banks that did support its moratorium were Mizuho, which is owed $235.2 million, and DBS, which is owed $93.6 million.
Besides the Tianjin Dagang plant in China (net book value of $139.8 million), Hyflux is not considering a sale of any other assets at this time.
Ms Lum held that if Hyflux is liquidated, unsecured creditors are likely to suffer a 72 per cent to 85 per cent loss in face value.
Hyflux and the Securities Investors Association (Singapore) will conduct town hall meetings for investors on July 19 and 20.
The court told Hyflux to provide an update in three months.
Mr Ezien Hoo of OCBC Credit Research said yesterday: "So far... we don't yet have... a firm view on whether the company will emerge as a viable business."