Utico may reduce Hyflux equity injection if no deal inked by next week

Utico also announced that it had agreed in principle with Hyflux to cap all advisers' fees at $40 million.
Utico also announced that it had agreed in principle with Hyflux to cap all advisers' fees at $40 million.ST PHOTO: CHONG JUN LIANG

Hyflux's would-be white knight Utico said it will shrink its proposed $300 million equity injection to $200 million by early next week if the embattled firm has still not signed a restructuring deal.

"This continuous loss of time has a great impact on the holding value of Hyflux," Utico said yesterday.

The water treatment firm has not yet responded to a request for comment on the announcement.

The United Arab Emirates utility firm also announced that it had agreed in principle with Hyflux to cap all advisers' fees at $40 million.

This will resolve a key item under Hyflux's restructuring agreement and is a step closer to having the rescue deal finalised, Utico said.

It added that Hyflux adviser Nicky Tan led recent talks with Utico's board.

Utico chairman Rashid Al Balooshi said he and Mr Tan will discuss with all other advisers to recommend that they agree to the fee limit.

The original proposed rescue package involves Utico taking an 88 per cent stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan. Also, it is offering two possible options to the 34,000 retail perpetual securities and preference shareholders hoping to recover the $900 million they invested in Hyflux.

 
 
 
 

The original proposed rescue package involves Utico taking an 88 per cent stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan.

Also, it is offering two possible options to the 34,000 retail perpetual securities and preference shareholders hoping to recover the $900 million they invested in Hyflux.

One option is a $50 million payout based on small investors who had put in $2,000 to $3,000. They would each get 50 per cent of their holdings, up to $1,500.

The other option is a $100 million payout over four years plus a 4 per cent stake in the enlarged Utico group.

Excluding the equity injection, the other portions of the package will remain the same even if the restructuring agreement is not signed by early next week, Utico said yesterday.

Last week, advisers and a delegation from Hyflux led by chief executive Olivia Lum visited Dubai to discuss pending issues.

Utico said an agreement on board representation was reached.

A spokesman told The Straits Times yesterday: "Currently, any Hyflux board member can resign without responsibility. But we want some of them to stay during and after this (restructuring) process, hence our flexibility in understanding their situation."

Utico has also reiterated its concern about the talks dragging on, which could have an impact on the bottom lines of both companies.

It stressed that time is of the essence, seeing as other parties are eyeing Hyflux's assets.

Hyflux had told the court last month that more than one rescuer stands ready to invest in the debt-laden firm, even if a deal with Utico were to fall through.

It also said on Wednesday that executive vice-president and group chief financial officer Lim Suat Wah takes sabbatical leave from Nov 8.

 
A version of this article appeared in the print edition of The Straits Times on October 25, 2019, with the headline 'Utico may reduce Hyflux equity injection if no deal inked by next week'. Print Edition | Subscribe