SINGAPORE - As the clock ticks down to the Dec 19 deadline when Hyflux's debt moratorium will be lifted, the survival of the insolvent water project developer could hinge on whether any strategic investors come through.
WongPartnership partner Manoj Sandrasegara, who represents Hyflux, told a Singapore High Court on Monday (Oct 8) that the company had "spent a lot of time" meeting with strategic investors in September to discuss deal terms. "Hopefully something can be said in November," he said. He mentioned two interested parties, but declined to reveal their identities.
If Hyflux is able to hammer out a deal with potential strategic investors, then it will have visibility over how much of its debts can be paid in full, and the company can start negotiating the terms of a restructuring with creditor groups.
Mr Sandrasegara added: "I know the company has come under some criticism from creditor groups that information disclosure has been slow, but the company has to prioritise things like the stabilisation of the business, preparing data rooms for DIP (debtor-in-possession) financiers, and getting the TuasOne and Qurayyat projects going."
At Hyflux's case management conference on Monday, Justice Aedit Abdullah said that if Hyflux were to ask for the debt moratorium to be extended for a further six months in December, he might need more convincing to extend their lifeline. He said: "I will need very strong reasons because you have had six months and some investors are getting quite skittish given how things are going... Opposition from creditors might be significant at that point."
In response to Justice Abdullah's question on where he sees Hyflux at the end of December, Mr Sandrasegara replied: "On the basis of a wish list, we would like to see a binding term sheet (with a strategic investor) executed subject to a scheme of arrangement with creditors. If we move at great speed and creditors are agreeable, we could have an in-principle agreement that can be put to a vote by creditors... I don't think we can get a scheme signed and sanctioned before the moratorium ends."
Hyflux has previously emphasised the importance of pulling in a strategic investor to give the company a cash injection in exchange for control. Hyflux is in the EPC (engineering, procurement and construction) business, where cash is needed to win new projects and work on them.
Meanwhile, the sale process for Tuaspring is ongoing. Maybank, Hyflux's largest secured lender, had earlier agreed to give it until Oct 15 (next Monday) to find a buyer for the Tuaspring integrated water and power plant and ink a binding purchase agreement.
Reportedly, Sembcorp Industries was the only party to submit a final bid for Tuaspring by an Oct 1 deadline. Hyflux has approached national water agency PUB to allow overseas bidders to cast bids as well, Bloomberg reported. However, it is not clear yet if Hyflux has received any firm interest from overseas investors.
It remains to be seen if Hyflux accepts Sembcorp's bid for Tuaspring (which Bloomberg reported is not sufficient to cover the debts owed to Maybank). Other possible outcomes are that the contractual deadline between Maybank and Hyflux gets extended beyond Oct 15, or Maybank puts Tuaspring under receivership. Lawyers for PUB were present at the case conference on Monday, though they remained silent throughout.
The next hearing for Hyflux will take place on Oct 31, at which time an interim update will be given on the progress of its restructuring.