SINGAPORE: Embattled water treatment firm Hyflux is in advanced talks with at least two strategic investors and hopes to conclude them by November, its lawyers said during a status conference hearing in court on Monday (Oct 8).
The company is also concurrently working towards a mid-October deadline to sell its Tuaspring Integrated Water and Power Plant, its lawyers said.
AdvertisementHyflux is racing against the clock to fulfil its obligations even as debts mount.
It was revealed at the status conference - which was part of the court’s requirement for granting the firm a six-month moratorium in June - that Hyflux has been unable to pay rent on two offices over the past month, according to lawyers acting on behalf of HSBC Institutional Trust Services, the trustee of Ascendas Real Estate Investment Trust.
Channel NewsAsia understands that the company is in discussions with its landlord over the recent rent arrears.
PROCEEDING TOWARDS OCT 15 DEADLINE
AdvertisementAdvertisementHyflux, which first made its mark in water treatment and later ventured into power generation, unexpectedly announced a court-supervised reorganisation of its business in May, citing “prolonged weakness” in the local power market for the turnabout in its fortunes.
It later obtained an additional six-month moratorium on Jun 19.
Hyflux has been trying to divest Tuaspring, its single largest asset, to help repay creditors.
With liabilities of S$2.95 billion, the divestment of the combined desalination and power plant, which cost more than S$1 billion to build and marked Hyflux’s move into the electricity market, has been seen as key to resolving the company’s cash crunch.
The company has until Oct 15 to ink a binding deal with a successful bidder for Tuaspring, as part of an agreement with Maybank - Tuaspring’s only secured creditor.
On this, Hyflux’s lawyers from WongPartnership would only say that the company is “proceeding towards that deadline” and that “there could be other conversations with Maybank on the process itself”.
WongPartnership partner Manoj Sandrasegara was, however, tight-lipped on other details, citing confidentiality.
Mr Sandrasegara did elaborate more on potential strategic investors, saying that the company is “moving very quickly”.
While the company is in talks with several potential strategic investors, discussions with two investors are at an advanced stage.
“Hopefully, something can be said in November, which gives an indication of where this restructuring is going,” said Mr Sandrasegara, without revealing names.
He added that Hyflux has always been keen to rope in strategic investors, whose investments will be able to pave the way for negotiations with creditors on whether its debts can be paid in full or if there will be haircuts, as well as the terms of restructuring.
SETTING PRIORITIES
During the status conference, Hyflux had to fend off criticism from some of its creditors – BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered which were represented by Tan Kok Quan Partnership – over a lack of information and updates about the reorganisation process.
WongPartnership lawyers refuted the criticims, saying it had uploaded a business review deck and other documents onto a so-called data room in September to provide more information.
“While (information) may appear slow to some, the company also has to prioritise things, such as the stabilisation of its business, the Tuaspring process underway, preparing data rooms for DIP (debtor-in-possession) financiers and getting the TuasOne and Qurayyat projects going,” said Mr Sandrasegara in court.
“The idea was that as the creditor groups formed themselves in bigger groups then we can start to liaise with the financial advisors to see what information we need and eventually when there is a deal, we can start to negotiate with these parties and the creditors at large.”
On that, the court ordered Hyflux to provide an interim update to creditors during a full-day hearing on Oct 31.
Judge Aedit Abdullah said that while much has been done in terms of engagement, several financial institutions felt that Hyflux did not provide sufficient information on the restructuring process.
"I encourage that there’s as much information sharing as possible without causing commercial difficulties and I would emphasise given that this is a long moratorium period, the company does it best to engage all creditors, noteholders, perpetual and preference shareholders."
Another court hearing is also scheduled for Nov 19 for Hyflux to present more updates on its reorganisation progress and its future direction before its moratorium expires in mid-December.
When asked by the judge where he sees Hyflux at the end of the moratorium, Mr Sandrasegara replied that the wish list would consist of the company executing a binding term sheet with a strategic investor, subject to a scheme of arrangement with creditors.
However, he added that it was possible a scheme would not be signed and sanctioned before the moratorium ended.
To that, the judge said it would be an “uphill task” for Hyflux to request an extension given that it had already been granted a six-month debt reprieve.
“It’s quite clear that some investors are getting skittish the way things are going so it will have to take quite a bit to convince me to give you another six months, especially if there is nothing concrete in terms of the proposal that can lead to a resolution,” said Judge Aedit Abdullah.
“If it comes to that, it may be a bit of an uphill task.”
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