Hyflux debt moratorium extended to May 24

The High Court has allowed Hyflux and its three subsidiaries another month of reprieve from their creditors as the company works on two possible plans to avoid liquidation.
The High Court has allowed Hyflux and its three subsidiaries another month of reprieve from their creditors as the company works on two possible plans to avoid liquidation.ST PHOTO: TIMOTHY DAVID

SINGAPORE - The High Court on Thursday (April 25) allowed embattled water treatment firm Hyflux and its three subsidiaries another month of reprieve until May 24 from their creditors as the company works on two possible plans to avoid liquidation. The order was passed just days before an earlier court-sanctioned protection from creditors was set to expire next Tuesday (April 30).

One of the plans involves a possible $400 million injection from an owner and developer of water and power utilities based in the Middle East, for which Hyflux said earlier on Thursday afternoon it has received a non-binding letter of intent.

The potential investment will be used for equity and working capital purposes, as well as possible urgent interim funding. Discussions are ongoing with the potential investor, who has a "reputable track record", said Hyflux in an announcement released just one hour before the hearing to extend its debt moratorium. The entity has not yet been identified.

A second plan involves ongoing projects and assets to be transferred to a special purpose vehicle to be wholly owned by Hyflux. "The shares in the SPV will be pledged to the senior unsecured creditors via a scheme in exchange for partial retirement of the senior unsecured debt," Hyflux founder Olivia Lum said in an April 23 affidavit.

But several creditors including a group of seven unsecured banks were granted leave by the High Court on Thursday to file applications for Hyflux and Hydrochem to be placed under judicial management and/or interim judicial management. A hearing on the JM application is scheduled for May 13.

Mr Eddee Ng, senior partner at Tan Kok Quan Partnership, who represents the group of banks, argued: "We are 10 months into the restructuring. Beyond a non-binding letter of intent which (Hyflux) has shown to no one, we have nothing."

"As far as we know, these plans on paper remain hypothetical scenarios and we should call them as such," Mr Ng said.

 
 

He also criticised the restructuring process as having "gone all over the place" in the past 10 months.

"It is marked by a lack of transparency by Hyflux and the application came at the back of repeated requests for information," he said. "There is good cause to replace the management of the company with a judicial manager because we have lost confidence in the management and board of Hyflux in continuing to run the restructuring. And this is echoed by a lot of retail investors."