Debt-ridden Hyflux and its potential white knight Utico are "progressing" towards a $400 million binding deal that requires the approval of senior creditors and some 34,000 junior creditors trying to recover $900 million they had invested in the water treatment firm.
The United Arab Emirates utility firm is looking to take an 88 per cent stake in Hyflux, with an investment of $300 million as equity and a $100 million shareholder loan, they said in a joint update filed with the Singapore Exchange yesterday.
But both are still working towards a binding agreement, subject to approvals from all stakeholders and definitive documents being finalised and entered into.
Utico also intends to offer the cash equivalent of a 4 per cent stake in the enlarged Utico group, plus additional cash to holders of Hyflux's retail perpetual securities and preference (PNP) shareholders. Details of Utico's offer to PNP shareholders will be released prior to a town hall.
Utico chief executive Richard Menezes told The Straits Times yesterday that the approval of senior creditors and Hyflux's retail PNP shareholders will be sought "through meetings and votes".
This is even as a Hyflux adviser had earlier said junior creditors' votes are not needed.
Asked why Utico is offering to help the junior creditors, Mr Menezes had said: "We are white knight investors. Water and utilities are based on public necessity and should be based on ethics too... They (PNP investors) cannot be ignored, whether they have votes or not. It is ethical."
In May, Mr Menezes had said that small investors of about $2,000 to $3,000 could get a 50 per cent cash redemption along with full redemption opportunity, while the rest of Hyflux's investors could get a similar but staggered and cascade deal.
After the June 27 deadline for Utico and Hyflux to enter into a binding agreement passed, Hyflux said "there have been informal discussions ongoing". It added that there have been face-to-face meetings with Utico, and both parties met representatives of various stakeholder groups this week to discuss the proposed investment.
Asked what issues have yet to be ironed out, Mr Menezes said the key issue is "shortage of time and business value deterioration, hence stakeholder approvals are the key aspect".
Both Utico and Hyflux say they intend to enter "definitive documentation in respect of the proposed investment" as soon as possible, and to hold town hall meetings for PNP investors and holders of medium-term notes, "ideally before the next court hearing" on Aug 2 when the court-approved debt moratorium ends.
They added that they are "cognisant of time being of the essence to preserve value".
Hyflux yesterday said it is still in talks with various investors. This follows a failed rescue deal with Indonesia's Salim-Medco group.