SINGAPORE (THE BUSINESS TIMES) - Middle East utility firm Utico has again revised its proposed rescue deal for Hyflux, with a promise to deliver a bigger return to creditors.
The firm said yesterday that it has upped its offer to a minimum of $485 million, comprising cash and stock.
Utico did not disclose full details of the new plan in its statement.
Last November, Utico and Hyflux signed a $400 million rescue deal. It would have seen Utico subscribing for $300 million new shares in the troubled Singapore water treatment firm for a resultant 95 per cent stake, and granting Hyflux an up to $100 million working capital line.
Under the latest proposal, the return to both unsecured senior creditors and retail investors of Hyflux's preference shares and perpetual securities (PnP) will be "more than 10 per cent" higher than under the restructuring agreement inked on Nov 26 last year, Utico said.
PnP holders with holdings of less than $10,000 can now expect 15 per cent to 50 per cent recovery, as they will each get $1,500, or 50 per cent, whichever is lower.
Larger PnP holders will see at least 10 per cent recovery. Utico did not specify if investors will receive this in cash and whether it will be an upfront or deferred payment.
The firm said the plan will benefit about 21,000 small PnP holders and 12,000 to 13,000 larger ones.
Advisers will also receive their fees from a $40 million pot as set out in the Nov 26 agreement.
In January, Utico had tried a carrot-and-stick approach by saying it would either increase this pot to $50 million if all advisers supported the scheme, or shrink it to $30 million if the advisers failed to give their support.
The offer has been extended to Aug 30 as requested by Hyflux and its stakeholders during a June 25 meeting, Utico said.
The firm said the higher offer and the deadline extension were considered a de facto extension of the Nov 26 restructuring agreement.
"The extension also allows for the scheme, as filed in the court by Hyflux creditors, to proceed with higher recovery," Utico said, adding that this will save time, further costs and value leakage.
Last November, Utico and Hyflux signed a $400 million rescue deal. It would have seen Utico subscribing for $300 million worth of new shares in the troubled water treatment firm for a 95 per cent stake, while granting Hyflux working capital line of up to $100 million.
The earlier $400 million rescue deal would have seen Utico set aside $250 million in cash to settle around $1.6 billion of debts. It would also use up to $100 million to pay off the $900 million owed to the PnP retail investors.
However, the utility firm made a stark change to its offer in May, demanding that all Hyflux creditors accept shares of Utico and Hyflux as payment instead of cash as initially agreed.
The Securities Investors Association (Singapore) had dubbed the less favourable deal a "bombshell" for the PnP holders.
The Emirati firm said yesterday that with its increasing order book and its aspirations to be the leading provider of sustainable utilities solutions worldwide, "this acquisition will give all shareholders of Utico and Hyflux assured better return prospects over the coming years".
"Shareholders of Utico are keen to conclude this deal at the earliest, and proceed to building value for all stakeholders of Utico and Hyflux," it added.
On July 27, Singapore's High Court will hear the applications by an unsecured working group (UWG) of banks and by ESR-Reit to be carved out of the firm's debt moratorium.
The UWG comprises Mizuho, KfW, Bangkok Bank, BNP Paribas, Standard Chartered Bank, CTBC Bank and Korea Development Bank.