Singapore—Middle Eastern utility company, Utico which has expressed interest in investing in Hyflux, the beleaguered Singaporean water treatment company for a few months now, said on August 14 that because Hyflux is “leaking value,” the company needs to decide on an investor right away.
In an effort to make clear the actual deadline for Hyflux to consider Utico’s offer, the Middle Eastern firm has said 5:00 pm on Friday, August 16 is the “milestone” when the choice of investor is expected to be announced.
According to Utico, “This is 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.”
The utility firm also said that should Hyflux choose a different investor, Utico may “change its offer for whatever value is left”. However, if Utico is the chosen bidder, Hyflux needs to sign a deal with the utility company by August 26th, Channel NewsAsia (CNA) reports.
On July 16, Utico announced that it would buy an 88 percent stake in beleaguered water treatment firm for the amount of S$535 million.
Back then, the utility firm said that the agreement was subject to several regulatory approvals, and also the approval from creditors, the court, investors and the Singapore Stock Exchange. The statement also said that Hyflux will continue to be a company that’s separately listed.
Utico also bared its plan of offering the cash equivalent of a four percent stake in the enlarged Utico group, along with additional cash payouts, which should give the perpetual securities and preference (PNP) shareholders of the water treatment company “50 percent of their first S$2,000 to S$3,000 as well as a cascade and staggered deal to the rest, thus offering them options to exit and hope for full redemption,” Richard Menezes, the managing director of Utico, said.
Since then, the deal between the two companies has not advanced, while the water treatment firm said it’s talking to several other interested parties and has received other non-binding letters of intent from global Oyster Bay Fund and a China-based suitor which has remained unidentified.
Hyflux also received its fifth debt moratorium extension, which means its creditors may not take action against the beleaguered company until the end of September.
It seems that Utico’s patience with Hyflux is running out, as it said that the other letters of intent from other would-be investors are merely “a delaying ploy with intent to lose Hyflux valuation and assets/contracts”, and expressed concern that “Hyflux and its advisors are not facilitating nor informing the public of the factual situation.”
According to the statement from Utico, “Instead they are asking the court for more time as much as four months to extend their fees but when this time is eroding value for investors, creditors, PNP and all other stakeholders” the statement added.
Utico is calling on the board of Hyflux “to act without delay,”since it has “fiduciary and legal responsibility to take the best decision and measures for the long-term success of the company and remove it from its current situation without losing further valuation loss”.’/TISG
Read related: Hyflux white knight Utico to buy 88% stake for S$535 million
Hyflux white knight Utico to buy 88% stake for S$535 million