SINGAPORE - The High Court on Wednesday (May 29) allowed debt-ridden water treatment firm Hyflux and its three subsidiaries two more months of reprieve from their creditors - until Aug 2 - as the company continues to work with several investors to nail down a new restructuring plan.
Hyflux had asked for a four-month extension on its debt moratorium, saying it is now in discussions with five other potential investors, in addition to UAE utility Utico, Mauritius-based multi-strategy investment fund Oyster Bay Fund and a third investor said to be a big desalination plant company.
In asking for the extension, Hyflux said it has made progress with its restructuring efforts including holding weekly restructuring meetings with various creditor groups to update them, as well as in its discussions with various potential investors.
Utico has given Hyflux until June 17 to sign a binding agreement with them.
While Justice Aedit Abdullah said he was "concerned about giving a four-month extension at a go", he also told Hyflux to "assure the investors I will be amenable, if progress continues to be made, to a further two-month extension" beyond Aug 2.
As for the conditions that should be met in order for further extensions to be given, Justice Aedit said: "In relation to the payment for advisers I would stipulate a condition that more detailed breakdown identifying how much has been paid and what remains payable to be given to... the court in two weeks."
This is because the company's cash flow position isn't strong and remains a key concern for various creditor groups, particularly those who haven't been paid.
The order was passed as an earlier court-sanctioned protection from creditors was set to expire on Wednesday.
"Aside from these conditions, I will indicate other matters which the court strongly encourages. If there is non compliance, it will be taken into account," Justice Aedit said.
He said he hopes there will be continued engagement with all stakeholders, in particular, the perpetual securities and preference shareholders and the perpetual securities trustee.
"I would also strongly encourage all advisers, as far as possible to leave actual discussions with investors to (Hyflux)," he said, adding that at the very least, they "should let the company know what they intend to do" if they have to approach the investors.
This came after Hyflux and creditor DBS Bank expressed concerns over potential judicial manager Borrelli Walsh approaching Utico on at least two occasions even before a binding agreement is signed.
So far, Hyflux has managed to fend off a bid by seven banks - which are collectively owed $648.7 million in debt - to start the legal process that could have seen the firm and a key unit placed under judicial management.
But Mr Eddee Ng, senior partner at Tan Kok Quan Partnership, who represents the group of banks, which represent 31 per cent of senior debt, argued that Borrelli Walsh "went out of its way to inform Utico that the banks are not reviving the JM application".
Hyflux is in talks with Utico for a $400 million investment, Oyster Bay Fund for a potential investment of up to $500 million, and a third unidentified investor that Hyflux described as one of the world's top 10 largest desalination companies. The third investor has issued a non-binding letter of intent for its assets.
In April, it aborted a $530 million deal with Indonesian consortium SM Investments and is now fighting to claim a $38.9 million deposit from the entity.