United Arab Emirates utility Utico is dangling an offer of reprieve to the beleaguered 34,000 retail perpetual securities and preference (PNP) shareholders now trying to recover around $900 million they had invested in Hyflux.
Utico chief executive Richard Menezes said in a statement yesterday evening that the firm was offering "part cash redemption and also a hope for full redemption with a plan and exit option".
"Full details can only be revealed later, but... small investors of up to $2,000 to $3,000 could get 50 per cent cash redemption along with full redemption opportunity, while the rest of the investors could get a similar, but staggered and cascade deal."
Mr Menezes said he made this offer at a meeting last week with the Securities Investors Association (Singapore) (Sias), Utico advisers including global law firm White & Case, Emirates NBD Capital, and Hyflux financial and legal advisers, among others.
Utico also said a town hall meeting for PNP shareholders will be planned with Sias. But Mr Menezes said this meeting is "predicated on Hyflux signing a binding agreement, and subject to the High Court granting a moratorium to complete a desirable restructuring in time".
He added that the company was "working towards investing in Hyflux as a going concern and not as a bankrupt organisation. This can be possible only by retaining the goodwill of all stakeholders".
Utico chief executive Richard Menezes said "all investors will have an opportunity to get their money back... if they support the deal". He added that this offer is made only to the junior creditors and not senior creditors.
This offer comes three days before a High Court hearing on Wednesday on whether debt-ridden Hyflux will get further reprieve from creditors.
Justice Aedit Abdullah had stated in a court hearing earlier this month that "the moratorium is not likely to be as long as it used to be, and I may attach conditions". These include "disclosure of running costs of the company, including all of its restructuring efforts, and a timeline given to me of the expected completion of restructuring effort... leading up to a possible scheme application and some assurance of continuing engagement with various creditors".
Mr Menezes said "all investors will have an opportunity to get their money back... if they support the deal". He added that this offer is made only to the junior creditors and not senior creditors as "they took an active business risk with ringside view, whereas PNP investors took a passive blind faith risk".
"Neither coupon nor principal was guaranteed in the offer prospectus and while trading at SGX (Singapore Exchange), and morally, there remains some responsibility from Hyflux for the PNP predicament."
Mr Menezes noted that if Utico gets PNP support for the deal, it could consider listing in Singapore and "put some skin in the game".