SINGAPORE: United Arab Emirates utility company Utico on Thursday (May 16) proposed to hold a town hall session for investors of Hyflux’s perpetual securities and preference shares so as to put together a “win-win proposal”.
In a statement issued to the media, Utico added that it has also requested national water agency PUB “to grant a delay in the takeover of the Tuaspring desalination plant”, which is scheduled to take place on May 18.
AdvertisementUtico is the potential white knight which has indicated its interest to invest S$400 million in embattled Hyflux last month.
Over the weekend, Reuters reported that Utico had submitted a binding term sheet for its proposed investment. Hyflux, however, clarified on Tuesday that all it got was a “draft term sheet”.
Nevertheless, the UAE-based utility firm said on Thursday that it hopes to hold a town hall meeting for Hyflux’s perpetual securities and preference shareholders – a large group of 34,000 people, with a majority being retail investors – “in the coming days”.
“We understand that the investors of Hyflux are the ones who will suffer the most,” said Utico’s chief executive Richard Menezes.
AdvertisementAdvertisement“These junior unsecured, unguaranteed securities will get nothing when Hyflux is not performing nor is Hyflux obligated legally to pay them in current conditions.
"This is compounded further if the company is either sold to funds, to investors seeking overseas assets or goes into judicial management,” the statement said.
Mr Menezes added that “a white knight investor cannot be an investor that only wants Hyflux and its assets or its businesses”.
Instead, Utico wants to be the investor that seeks a “fair and quick resolution” with the holders of perpetual securities and preference shares.
“We will discuss and put a solid proposal after we hear them out. It is a fact that these investors are unsecured and/or any redemption or coupon must be a win-win deal,” the CEO said.
REQUEST FOR PUB TO DELAY TUASPRING TAKEOVER
This group of retail investors also contributed to the construction of the Tuaspring Integrated Water and Power Plant, as funds raised from Hyflux’s perpetual bonds and preference shares were channeled into this project, said Utico’s Mr Menezes.
As such, it is hoping to push back a scheduled takeover of the Tuaspring desalination plant by PUB and has sent in a request to the national water agency on Wednesday.
“Hyflux is aware (of the request),” Utico told CNA.
By doing so, it hopes to enter into a transaction with Hyflux, "which would provide for remedial and rectification action of the plant to PUB’s satisfaction and goodwill".
It added that it understands Tuaspring’s status as a “strategic asset” and is “prepared to work with Hyflux to ensure it performs without compromising any security aspects”.
The planned takeover followed national water agency PUB’s notice to Hyflux last month that it will terminate the water purchase agreement and seize the Tuaspring desalination plant at zero dollars. The termination notice provides a 30-day notice period, which will end on May 17 and pave the way for the takeover the day after.
CNA has reached out to Hyflux and PUB for comments.
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