The High Court yesterday granted debt-ridden water treatment firm Hyflux two more months of reprieve from its creditors - until Dec 2 - as it continues to work with United Arab Emirates utility Utico and several unidentified investors to nail down a restructuring plan.
Busting yet another deadline, Hyflux and its three subsidiaries sought another extension after the previous two-month extension expired yesterday.
This came after Hyflux chief executive Olivia Lum stated in a May 27 affidavit that if all went to plan, the scheme meetings would be held in late August, and the court-sanctioned restructuring process would be completed in September. A case management conference will be held on Oct 31, and a hearing on Nov 29 for a further extension if needed.
In arguing for the extension, Hyflux yesterday said it is very close to a deal with Utico, but needed more time to resolve "final outstanding issues" in the draft agreements. Even though the proposed deal with Utico remains a front runner, should it fail to materialise, there are other interested investors with whom Hyflux could negotiate.
When asked, WongPartnership partner Manoj Sandrasegara, who represents Hyflux, declined to reveal the identities of these potential investors and how much they are prepared to invest, citing non-disclosure agreements.
When asked what key issues are yet to be resolved with Utico, Mr Sandrasegara told The Straits Times: "The main gaps concern the scheme consideration for the senior unsecured creditors and whether there is some seepage from that amount to pay other trade creditors."
The scheme consideration refers to the amount the senior unsecured creditors would receive from Utico in return for their debt being extinguished.
The other loose end, he said, is the source of funds to meet Utico's obligation to make one of the payments that constitute the scheme consideration.
Utico's proposed deal will see it take an 88 per cent stake in Hyflux through a $300 million equity injection and a $100 million shareholder loan. Utico also intends to offer the cash equivalent of a 4 per cent stake in the enlarged Utico group plus additional cash to PNP investors.
The parties have also arrived at a substantially agreed creditor term-sheet that would help facilitate the signing of a restructuring agreement with Utico, or any other investor within a relatively short time, said Mr Sandrasegara. He said that this strengthened the case for an extension.
But Mr Eddee Ng, a senior partner at Tan Kok Quan Partnership, who represents a group of seven unsecured banks collectively owed $648.7 million, said they do not support the extension. He cited several concerns flagged in a letter written by the unsecured working group of creditors' advisers to Hyflux.
They included the length of time taken in the restructuring effort, ST understands.
Mr Sandrasegara also told the High Court yesterday that Hyflux has received payment from the settlement of an arbitration award. As a result, Hyflux's cash flow position is substantially improved and the proceeds will be used to complete the restructuring, he said.
