SINGAPORE - Hyflux is likely to seek another four months of reprieve from creditors before its current court-approved debt moratorium expires on Dec 18.
If granted more time, the insolvent water project developer hopes to reach a deal with its creditors via a court-sanctioned scheme of arrangement by April next year, a Singapore High Court heard on Wednesday (Oct 31) during an interim update on the restructuring.
WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux, added that the company intends to file an application for super priority for rescue financing under Section 211E of the Companies Act by Thursday. Hyflux announced on Oct 19 that it had found a "strategic investor" in SM Investments, a consortium between Salim Group and Medco Group.
SM Investments has agreed to give Hyflux a $400 million equity injection, in exchange for a 60 per cent stake in the company once it has settled all its debts. SM Investments will also grant Hyflux a shareholder's loan of $130 million and a debtor-in-possession loan of $30 million to help finance it through the restructuring. The deal is subject to the approval of creditors, as well as the PUB and other authorities.
The deal will include debt-for-equity swaps since Hyflux does not have enough cash to clear all its debts. SM Investments has also agreed to issue shares to certain key members of the Hyflux management team to ensure management continuity. It remains to be seen what terms Hyflux's lenders are willing to accept for the $530 million that SM Investments has put forward.
Hyflux continues to face heat from bank creditors. Tan Kok Quan Partnership lawyer Eddee Ng - who represents BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered Bank - told the court on Wednesday that creditors need more visibility over Hyflux's financial affairs in order to assess "if this is going to be a pointless restructuring".
Mr Ng said: "We've seen widely varying numbers for the cash flow forecasts that have come on the 13th, 21st and 25th of September. We must know what's gone into them... and how likely are certain things that have been put in."
The estimated costs required to complete the TuasOne waste-to-energy plant have also doubled in a matter of months, Mr Ng flagged. On May 22, when Hyflux filed for court protection, the costs were estimated at $85 million. The figure was raised to $132 million in June, and $172 million in October. The expected project completion date is now September 2019, from May 2019 previously.
Mr Ng said: "Information must be given for the creditors to assess what are we doing under six months of restructuring if we are not heading anywhere."
The entire Hyflux group had bank debts of about $1.84 billion in June. Note holders are owed $265 million. Perp and preference shareholders are owed $900 million.
