SINGAPORE - Hyflux and three of its subsidiaries have applied to the Singapore High Court for an additional three-month reprieve from its creditors as it works on another plan to avoid liquidation, it announced in an exchange filing on Tuesday (April 23).
The applications will be heard at the next case management conference scheduled on April 25, just days before its court-sanctioned protection from creditors expires on April 30. If granted, the debt moratorium will be extended to July 30, 2019.
The troubled water treatment firm said on Tuesday that the applications were filed by Hyflux, Hydrochem, Hyflux Engineering and Hyflux Membrane Manufacturing.
Another subsidiary, Hyflux Innovation Centre (HIC), has not filed an application. HIC was part of the entities - together with Hyflux and the other three subsidiaries - that were granted a moratorium in June 2018 before they applied for an extension in November 2018.
Hyflux also disclosed in the filing that it knows of two claims, totalling US$65.03 million, made by Tahlyat Myah Magtaa SpA (TMM), the project company for its Magtaa desalination plant located in Algeria.
The company said it received a notice from Arab Banking Corporation of a claim by TMM of US$8.53 million under a counter-guarantee facility demanding immediate payment of that sum from Hydrochem and Hyflux.
Hyflux also said it has become aware of another claim of about US$56.5 million by TMM under a separate performance bond issued by BNP Paribas El Djazair, although BNP Paribas has not issued any legal notice in relation to this claim. Hyflux said it will provide further updates as and when it receives legal notice.
Hyflux said it disputes TMM's right to make these claims and is seeking legal advice on the appropriate steps to be taken.
Both claims are expected to have a material impact on the group's financial performance, it added.
In a private meeting on Monday, Hyflux’s advisers told David Gerald, president of the Securities Investors Association (Singapore), that the company will need at least three months for its new plan to materialise.
Hyflux’s new plan to return to solvency is to keep perpetual and preference shareholders whole in its books as equity rather than debt.
This will only be viable if Hyflux’s interest payments to its perp and pref holders are lowered or suspended for a number of years or perpetuity. No specific details have been shared yet by Hyflux.
After its planned rescue deal with Indonesia’s Salim-Medco fell through earlier this month, Hyflux is slated to lose its largest asset, Tuaspring, an integrated power and water plant project.
National water agency PUB has issued a notice to seize the Tuaspring desalination plant, while secured lender Maybank intends to appoint receivers to the Tuaspring power plant.
Meanwhile, Hyflux has appointed dealmaker Nicky Tan to help it find a new distressed investor.