Troubled water treatment firm Hyflux has enough cash for two or three months following an aggressive cost-cutting regime, founder Olivia Lum said in court papers.
The firm imposed a slew of austerity measures when its debt moratorium started a year ago and slashed headcount, cut senior management salaries and downsized its operations and headquarters. But the clock is ticking and Hyflux is in a race against time to nail down new investors to keep operations going and avoid liquidation.
It has managed to fend off a bid by seven banks - which are collectively owed $648.7 million in debt - to start the legal process that could have seen the firm and a key unit placed under judicial management.
The banks represent 31 per cent of senior debt.
Ms Lum said in an affidavit filed on April 30: "Far from being a 'mercy killing', a judicial management for a company as complex as Hyflux group is likely going to be a protracted and expensive process.
"The fact that the seven (banks) do not appear to have addressed the practical difficulties and potential costs associated with having judicial managers... to keep it running as a going concern strongly suggests that the real motivation is in fact liquidation."
Hyflux got a slight extension on its debt moratorium to May 29 from May 24, but further extensions will depend on whether it can provide "disclosure of running costs, including all of its restructuring efforts, and a timeline of the expected completion of restructuring effort", among other conditions.
It received a boost on Sunday when United Arab Emirates utility Utico upgraded its offer to a binding term sheet from a non-binding letter of intent to invest $400 million in Hyflux. Utico would provide working capital and any urgent interim funding as part of the offer, said managing director Richard Menezes in a Reuters report.
Hyflux said yesterday that it is finalising the term sheet with Utico but declined to give more details.
Ms Lum added that she is in talks with multiple parties on a potential investment, while financial adviser nTan is engaging a potential investor in South America and two others, in Taiwan and Singapore.
If it is allowed to continue its reorganisation process, Hyflux can keep sourcing for liquidity through a strategic investment and complete its pending projects. This would preserve their realisable value and deliver other financial benefits, Ms Lum said.
Hyflux's key assets are its equity stakes in its downstream subsidiaries, which carry out the group's main businesses in engineering and procurement and operations and maintenance.
A case in point is the Qurayyat Independent water project in Oman, which is not commercially operational yet due to technical issues relating to equipment purchased from third-party suppliers and civil and marine works carried out by third-party contractors.
If Hyflux and its Hydrochem unit are placed under judicial management, plant owner Qurayyat Desalination is likely to terminate the engineering, procurement and construction contract, especially if the judicial managers' inclinations are to abandon Qurayyat, Ms Lum said.
"There is a larger purpose to maintaining Qurayyat," she said. "There is an increasing demand for desalination plants in the Middle East. This is borne out by two of the more keen potential investors from this region. So completion of the (plant) makes the investment a more attractive prospect for strategic investors."