SINGAPORE: United Arab Emirates utility firm Utico on Friday (Sep 27) said it will support “any extension” in Hyflux’s debt moratorium, if the move is “not prejudiced” towards creditors or retail investors.
This means that the Hyflux board and advisers will need to ensure “no value leakage” in the company’s assets during the period of a moratorium extension, Utico said in a media statement.
AdvertisementAdvertisement“The key criteria … will be how Hyflux will stop value leakage during this new extension of moratorium period if the court does grant, and at the same time not be prejudiced towards creditors, particularly PNP (perpetual and preference shareholders).”
In the same statement, Utico said it has also written to the Securities Investors Association Singapore (SIAS), to offer its interest in filing an affidavit stating its support.
The Emirati firm added that it has also offered to provide further testimony of its negotiations with Hyflux, if required by the court.
Its comments come three days before a High Court hearing on Sep 30, which will decide if Hyflux gets a further reprieve from creditors.
AdvertisementAdvertisementThe debt-ridden firm is seeking a two-month extension in its court-approved debt moratorium. If it succeeds, it will be the company’s sixth moratorium extension since embarking on a court-supervised restructuring process last May.
Founded in 1989, Hyflux made a name for itself with its proprietary membrane technology and was regarded one of Singapore’s most successful business stories, before a heavy reliance on borrowing and a failed venture into power generation hurt its finances.
[h=3]READ: From making waves to drowning in red ink: Hyflux, Tuaspring and how a business giant came undone[/h]Over the past year, the troubled water treatment firm has been trying to secure a rescue investor to meet billions in liabilities.
It had reached a deal with Indonesian consortium SM investments last October, but that arrangement fell through in April.
Hyflux then began negotiations with other potential investors, including Utico which said it is willing to take an 88 per cent equity stake in Hyflux for S$300 million as equity and S$100 million as a shareholder loan.
Last month, Hyflux said it will “engage exclusively” with Utico but both companies have stopped short at signing a formal agreement.
[h=3]READ: Hyflux to 'engage exclusively' with Utico from now until Aug 26[/h][h=3]READ: Hyflux is ‘leaking value’ and has to ‘act without delay’ to pick an investor: UAE suitor Utico[/h]According to Utico, differences over advisers’ fees, board representation and management oversight remain as “key gap items”.
“We remain committed to Hyflux, along with the creditors and PNP, as an ethical ‘white knight’ investor,” said chief executive Richard Menezes, who added that the company held a townhall session with a “representative” group of Hyflux’s retail investors last month and “received majority approval” from those present.
“Utico received majority approval from the representative PNP attendees for the townhall conducted at Sheraton Singapore on Aug 1, 2019. The approval poll of that was over 77 per cent," according to Friday's statement.
In response to CNA’s queries on how big the representative group was and how it was determined, a spokesperson from Utico said the townhall was arranged by SIAS and was attended by 42 investors.
“The representative sample as per SIAS was accurate within plus or minus 5 per cent,” said the spokesperson.
SIAS "FULL SUPPORTIVE" OF LONGER MORATORIUM
Last weekend, SIAS also expressed its support for Hyflux's request of a two-month moratorium extension beyond the current expiry date of Sep 30.
In a statement, SIAS chief David Gerald said the local investor advocacy group had a meeting with Hyflux’s directors on Sep 16, where it was given updates on the company’s efforts to secure an investor and why it intends to seek an extension.
“SIAS notes that negotiations with Utico has reached an advanced stage and is fully supportive of the Hyflux’s plan to seek a two month extension to facilitate negotiations with Utico with a view to finalise and execute the proposed restructuring agreement.
“Should a deal with Utico not be reached, the extension would also facilitate Hyflux in pursuing discussions with the other interested investors, with the creditors still having the ability to apply for leave to bring an end to the moratorium if the creditors are not satisfied with the progress of negotiations. SIAS agrees that there will be no prejudice caused to the creditors,” the statement said.
Nevertheless, Mr Gerald added that SIAS “did impress upon Hyflux’s board to do their best to arrive at a satisfactory resolution” for the company’s stakeholders.
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