Hyflux mystery white knight with $400m lifeline is UAE's Utico

Hyflux's Innovation Centre in Bendemeer Road.
Hyflux's Innovation Centre in Bendemeer Road.ST FILE PHOTO

SINGAPORE - Embattled water treatment firm Hyflux is potentially getting a $400 million lifeline from United Arab Emirates utility and developer Utico FZC to be used for equity and working capital purposes and possible urgent interim funding, the company said in a Singapore Exchange announcement late on Friday (May 3). 

The announcement comes nearly three weeks before its debt moratorium expires on May 24, and ahead of a pivotal High Court hearing on May 7 on whether a group of seven unsecured banks, which collectively hold $648.7 million of debt, can be granted permission to start an action for judicial management.

If a carve-out is approved, these banks plan to file applications for Hyflux and Hydrochem Singapore to be placed under judicial management, and replace the current Hyflux management. These applications will be heard on May 13. 
 
In a bid to buy time, Hyflux had announced on April 25 - just an hour before its High Court hearing to extend its debt moratorium - that it received a non-binding letter of intent for a possible $400 million injection from an owner and developer of water and power utilities based in the Middle East.

Late on Friday, Hyflux announced that its legal and financial advisers are in active discussions with Utico’s legal and financial advisers on the terms of Utico’s investment, to be set out in a binding term sheet for execution.

Utico has informed Hyflux that it is "aware of the urgency of the restructuring", and that it intends to invest in the group and help preserve its key entities so that they remain intact and operational, Hyflux said.

The UAE utilities group - whose shareholders and investors include sovereign institutions of the governments of Oman, Saudi Arabia, Bahrain and Brunei - plans to retain Hyflux’s current management; and "reach an amicable deal with the group’s creditors and investors".

 
 

The High Court on April 25 allowed Hyflux and its three subsidiaries reprieve until May 24 from their creditors as the company works on two possible plans to avoid liquidation.   
 
If an acceptable strategic investment is not achieved, Hyflux founder Olivia Lum has proposed a second plan involving ongoing projects and assets to be transferred to a special-purpose vehicle (SPV) to be wholly owned by Hyflux. 
 
Hyflux on Friday said it is also in concurrent discussions with several other parties interested in investing in its business.