Singapore—Embattled water treatment firm Hyflux has been placed under judicial management, after Justice Aedit Abdullah on Nov 16 (Monday) said that the repeated extension for the company’s debt moratorium needs to “come to an end at some point”.
The water treatment firm’s application for a stay on the decision was denied.
An unsecured working group (UWG) of creditors comprised of seven banks (Mizuho, Bangkok Bank, BNP Paribas, CTBC Bank, KfW, Korea Development Bank, and Standard Chartered Bank) applied to have Hyflux placed under judicial management, which was granted by the High Court.
Borrelli Walsh, the adviser for the UWG, has been appointed interim judicial managers (JMs) for the beleaguered company.
Judicial management means that an independent body will run a firm that is in financial distress, replacing the company’s management board, which must to step down. This includes Olivia Lum, Hyflux’s high-profile founder and chief executive officer.
Justice Aedit Abdullah handed down the decision to appoint Borrelli Walsh as the firm’s judicial managers at the end of a hearing that lasted almost four hours, CNA reported.
By the week of Dec 14, Borrelli Walsh will return to court with an interim report and schedule for a case management conference.
CNA added, however, the legal representatives of other Hyflux stakeholders, including medium-term noteholders, DBS, and the Securities Investors Association Singapore, objected to the appointment of Borrelli Walsh, due to “appearance of conflict of interest” as well as the need for a “neutral and independent party.”
These concerns were noted by Justice Aedit, who said that parties may apply for “additional or substitution” judicial managers to be “heard another day”.
He said that the two-year-old court-supervised moratorium had not been “intended to continue indefinitely” but was a means to “give temporary reprieve” while Hyflux negotiated rescue plans.
However, “this has not been the case here,” Justice Aedit said.
“I’m not persuaded that sufficient grounds have been made for any further extensions and this must come to an end at some point,” he added.
On Nov 14, it was reported that Hyflux approved a white-knight bid from Strategic Growth Investments (SGI) to inject an amount of S$208 million into the company.
In 2019, news broke of Hyflux’s S$2.8 billion debt due to default notices and unsecured claims that had the company at the edge of insolvency. The Public Utilities Board (PUB) was set to take over the company for zero dollars.
In 2011, Hyflux was worth S$1.6 billion. Two years later the firm was expanding in the Middle East. However, the price of oil dropped, affecting Hyflux’s progress.
Meanwhile, the company had amassed huge debts, borrowing over S$1.4 billion in bank loans, perpetual bonds and an issue of preferred shares in order to build the Tuaspring plant.
While several would-be white knights came forward to help rescue the beleaguered firm, no deal has been reached to this date. —/TISG
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