Singapore—Much beleaguered water treatment firm Hyflux has announced that it is currently in talks with Utico FZC, a utility firm based in the Middle East, for a much-needed investment of funds to the tune of S$400 million (US$294 million).
Hyflux received a non-binding letter of intent from Utico; the water-treatment firm revealed the identity of its would-be white knight, which would translate to potential investment that could save the company. This new investment will go towards equity, working capital purposes, as well as possible urgent interim funding, the company announced on April 25, although it withheld from disclosing Utico’s identity until later.
According to Hyflux, its “legal and financial advisors are currently engaged in active discussions with Utico’s legal and financial advisors on the terms of Utico’s investment, to be set out in a binding term sheet for execution,” the firm said on May 3.
Utico is the largest full-service private utility and developer in the UAE, the company’s website touts. It is also “a major full-service utilities provider in the greater Middle East region.” Furthermore, the company is “one of the leading green companies in the UAE, as the first company to have obtained ISO 50001 certification for Energy management from Quality Austria.”
Among Utico’s shareholders and investors are sovereign institutions of the Oman, Saudi Arabia, Bahrain, and Brunei governments, according to its SGX filing.
Singapore Business Review reports that the Middle Eastern firm plans to make the investment into Hyflux in order for the water treatment firm’s entities to remain intact and operational, as well as to keep its current management in place.
Utico also hopes that an “amicable deal” will be reached with Hyflux’s creditors and investors.
According to Hyflux, “Utico has informed the company that it is aware of the urgency of the restructuring,” the company said on May 3. There are other investors that Hyflux is in talks with as well, it added. In April, the company said that its other investors are from North Africa, the Persian Gulf, and Australia, who have expressed interest in Hyflux’s assets and business, with some investors that Hyflux “would have synergy with.”
However, at the end of last month, a number of banks sought permission from the High Court of Singapore to file applications for Hyflux and Hydrochem to be placed under judicial management and/or interim judicial management, which was also indicated in Hyflux’s exchange filing on April 25.
Mizuho Bank, KfW IPEX-Bank GmbH, Bangkok Bank Public Company, BNP Paribas, CTBC Bank, The Korea Development Bank as well as The Korea Development Bank Singapore Branch applied on Wednesday, April 26, for the current debt moratoriums in respect of Hyflux and Hydrochem to be changed.
Judicial management “is a method of debt restructuring where an independent judicial manager is appointed to manage the affairs, business, and property of a company under financial distress. The company is also temporarily shielded from legal proceedings by third-parties, giving it the opportunity to rehabilitate.”
On April 25, the company applied for yet another extension on its debt moratorium at its case management conference. The company’s court-sanctioned protection from creditors is scheduled to end on the last day of the month.
Earlier in April, the company announced that it was scrapping a restructuring agreement with a previous would-be saviour. The water treatment company said they had no confidence” that the deal with Indonesian Salim-Medco consortium SM Investments (SMI) will push through.
Last year, SMI had agreed to invest S$530 million (US$391 million) into Hyflux in exchange for a majority stake in the company, which has debts amounting to S$2.7 billion (US $2 billion). The cash infusion from SMI was crucial to Hyflux’s survival.
Hyflux claimed that it had tried “on multiple occasions to meaningfully engage with SMI on its assertions on the restructuring agreement,” its attempts had no success.
Hyflux added, “In light of (SMI’s) responses and conduct, Hyflux has no confidence that the investor is prepared to continue to complete the proposed SMI Investment, even if all outstanding conditions precedent under the Restructuring Agreement are fulfilled.”/TISG