Hyflux, in its third year of a debt restructuring process, said it is supporting a plan proposed by American fund manager Strategic Growth Investments (SGI) to acquire and privatise it in a deal that would include a cash injection of $208 million.
The debt-ridden water treatment company will work with SGI to "facilitate the adoption and implementation of this proposal by the various stakeholders on a timely basis", Mr Lau Wing Tat, a Hyflux director, said in a filing to the Singapore Exchange last Friday.
In a term sheet that was part of the stock exchange filing, SGI pledged an "augmentation of executive leadership", and said it would replace Hyflux's board of directors entirely. Chief executive officer Olivia Lum would become non-executive chair of the advisory board.
Hyflux's debt includes bank loans and bonds held by 34,000 retail investors. Despite being approached by multiple suitors, it has failed to reach a deal and had sought several extensions on its debt moratorium.
Hyflux is facing claims totalling about $2.79 billion, some $1.03 billion of which is from holders of its perpetual securities and preference shares (PnP), the SGI term sheet showed. Banks are owed $630.7 million, according to the document.
Of the $208 million, PnP holders will get $41.3 million; medium-term note holders, $26.2 million; banks and facilities, $56.8 million; other creditors, $14.8 million; contingent claimants, $53 million; while trade creditors will get $15.8 million.
The Securities Investors Association (Singapore), or Sias, said in response to the new deal that it is ready to work with all investors to support the PnP holders.
"Although the SGI term sheet is non-binding and conditional, it contains a proposal to resolve the debts due to all stakeholder groups, including the PnP holders," said Sias president and chief executive David Gerald.
He noted that the cash payout equates to a 4 per cent recovery for the PnP holders.
The term sheet is valid for 60 days upon which time a binding letter of intent shall be issued and signed by all related parties. SGI aims to close the deal within 60 days of the execution of the letter of intent, it said.
SGI will terminate the deal should Hyflux go into judicial management, mainly because that would likely result in a prolonged process, Mr Michael Hong, chief investment officer of the US firm, said in a letter to Ms Lum.
The High Court on Oct 15 warned Hyflux about dragging out its restructuring process and said there would be no further adjournments on a hearing to decide whether it should be put under judicial control. The next hearing is today.
BLOOMBERG, THE BUSINESS TIMES
