Singapore—On Tuesday, November 26, a S$400 million restructuring agreement between embattled water treatment company Hyflux and the United Arab Emirates utilities company Utico was confirmed, following months of negotiations between the two firms.
This means that the UAE company will be acquiring a 95 percent stake in Hyflux.
This was confirmed via a conference call made between Richard Menezes, the CEO of Utico, and members of the press. Mr Menezes told reporters that the goal is to have completed restructuring by the first quarter of next year, as well as to have Hyflux’s shares and securities listed on Singapore Exchange (SGX) so that by then, trading may resume, Channel NewsAsia (CNA) reports.
Trading of shares and securities of Hyflux have been suspended since May 2018 when it filed for bankruptcy.
The Utico CEO also said that the company intends to list on the SGX within two years but as a distinct company.
Mr Menezes said to the press, “Utico will list on its own. (Hyflux) will remain as an independent company and we are confident that if we can move this quickly, we can take the company back to the market in a smooth manner.”
Olivia Lum, who heads Hyflux, was also present at the conference call. When asked about what part she would play in the future, she merely said, “We just signed the restructuring agreement. We are going to have to really focus on completing this restructuring as soon as possible. The rest of the things, over the next few months, we will discuss.”
CNA reports that “Utico will subscribe to 95 percent of its enlarged issued share capital for S$300 million via private placements,” as well as grant the water treatment firm up to $100 million as a working capital line.
The agreements between the two companies entails that $250 will be used to pay ‘pro rata’ to unsecured creditors— banks and other entities that hold Hyflux’s contingent and trade debt.
As for the 34,000 retail investors, to whom the company owes a total of S$900 million, they may be paid between S$50 and S$100 million.
They are presented with two choices: Either to obtain a cash payment upfront of fifty percent of their holdings in debt securities, with a maximum of $1500 or the second option given to them is the same amount (50 percent of holdings capped at $1500) but to be paid every six months over four years, with an additional pro-rated cash payment.
Utico’s Mr Menezes told CNA that his company’s offer was “substantially more than” what former would-be white knight SM Investments, an Indonesian consortium, had offered.
“We are quite sure that we have been more than fair,” he told CNA.
Additional details will be provided to shareholders at a later date.
In August, Utico urged Hyflux to come to an agreement without delay, saying that Hyflux was “leaking value,” even going so far as setting the end of the working day on August 16 as a deadline for the agreement to be firmed up.
According to Utico this was “necessary since all Hyflux assets and EPC (engineering, procurement, and construction contractor) contracts are leaking value due to delays and hence an ‘in time’ deal is imperative, leading to bonafide action protecting Hyflux’s worth for creditors and investors.” -/TISG