Utico will walk unless Hyflux inks definitive deal by Aug 16

Troubled water treatment plant Hyflux had hoped to get its debt moratorium extended until the end of November but Justice Aedit Abdullah only gave it two more months.
Troubled water treatment plant Hyflux had hoped to get its debt moratorium extended until the end of November but Justice Aedit Abdullah only gave it two more months.ST PHOTO: TIMOTHY DAVID

SINGAPORE - Hyflux has been given an ultimatum from the Middle Eastern utility firm that has lodged a rescue bid - sign by August 16 or the deal is off.

Utico chief executive Richard Menezes said on Friday (Aug 3): "We are a millimetre away from signing, it's up to them ... The value of Hyflux is falling."

He noted that the TuasOne waste-to-energy plant is Hyflux's "crown jewel" but it will only begin commercial operations next year and needs funds next month, which Utico has agreed to provide.

Mr Menezes added: "We met NEA (National Environment Agency) today and they said they will support it as long as there is funding for next month.

"They are running out of money at the project level."

The CEO was speaking to reporters at the end of a Singapore High Court session on Friday where Hyflux appealed for more time to compile a rescue.

The troubled water treatment plant had hoped to get its debt moratorium extended until the end of November but Justice Aedit Abdullah only gave it two more months. Hyflux can seek a further extension on Sept 30.

Justice Aedit said he wants to see Hyflux file an application to convene creditor scheme meetings by September before allowing the case to drag on: "If it doesn't work out in the next few months (with either Utico or other potential investors), I think I'll pull the plug."

 
 

Unlike the failed Salim-Medco rescue deal where Hyflux first signed a definitive agreement and then negotiated the finer details before hitting a wall, the approach it has taken with Utico is different.

Various stakeholders are engaging directly with Utico, said WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux.

"While the definitive agreement is being negotiated, the allocation is being negotiated simultaneously as well, in terms of what goes to creditors and what goes to capital needs," he said.

"We are optimistic that when the definitive agreement is signed, we can move forward quicker because by that time, the allocations should have been agreed."

Utico has agreed to take an 88 per cent stake in Hyflux through a $300 million equity injection and a $100 million shareholder loan.

So far, only Hyflux's unsecured working group of financial creditors has not agreed with the commercial terms of the restructuring, though other lenders like DBS Bank are supportive.

The working group said it has not received any proof of funds from Utico. Mr Menezes said proof has been provided although he has not gone into detail.

Utico previously said that its cash injection into Hyflux will be funded by a mixture of debt and equity.

While Utico is planning an initial public offering in two years, it will not depend on its proceeds to fund the rescue, Mr Menezes said, adding: "This deal is funded."

On Thursday night, he met with a "reflective sample" of around 60 of Hyflux's retail perpetual and preference shareholders through the assistance of the Securities Investors Association (Singapore) or Sias, Mr Sandrasegara said.

Mr Menezes said he was "well received" at the three-hour meeting, and that Sias will share more on the options Utico has put forth soon.

"I can only say that at the end of the meeting there was applause," he added.