SINGAPORE - The High Court has approved an application by embattled water treatment firm Hyflux and three of its subsidiaries for leave to convene a scheme meeting with all its creditors over its proposed restructuring.
It can now proceed with a scheme meeting on April 5 with unsecured creditors including noteholders and 29 banks, which make up one creditor class, as well as perpetual securities and preference shareholders, who make up another creditor class.
Under the reorganisation plan, filed with the High Court last week, some 34,000 registered holders of Hyflux perpetual securities and preference shares, which are owed $900 million, will receive a total of $27 million in cash and a 10.26 per cent share of the reorganised company.
Under the plan, unsecured creditors who are not holders of perpetual securities and preference shares will receive 27 per cent of shares, and a total cash distribution of $232 million.
This means that for every $1,000 invested, a holder of Hyflux's perpetual securities and preference shares will recover just $106.54, or an implied return rate of 10.7 per cent - from $30.15 in cash and $76.39 of implied value in Hyflux shares.
For medium-term noteholders, who are of a higher priority on the creditors' list, the implied return rate is 24.6 per cent, or $246.35 for every $1,000 invested. This is from a cash payout of $138.72 and $107.63 in Hyflux shares.
The bulk of Hyflux's share capital, about 60 per cent, will go to SM Investments (SMI), a consortium of Indonesia's conglomerate Salim Group and energy giant Medco Group. SMI has agreed to invest $530 million in the firm.
To pass, the scheme will need to be approved by April 5 by at least 50 per cent in number and 75 per cent in value of each creditor class. "If one class fails, the scheme fails," Hyflux said.
If the scheme passes, then an extraordinary general meeting will likely be held before April 16 - the deadline Hyflux has with SM Investments to get the restructuring plan approved - for ordinary shareholders to vote on the issue of new shares to SMI. More than 50 per cent of them must vote "yes" for the issue of new shares to SMI and the waiver of a general offer.
Hyflux will also hold its third round of town hall meetings with holders of its notes, perpetual securities and preferences shares, as well as ordinary shares on March 13.