Hyflux white knight Utico to buy 88% stake for S$535 million

Singapore—Middle Eastern utility company Utico will buy an 88 percent stake in beleaguered water treatment firm Hyflux, for the amount of S$535 million.

This was announced via a statement from Utico on July 16, Tuesday.

Utico said that the agreement is 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 says that Hyflux’s valuation is at S$340 million. However, the total value of the deal could be S$535 million, an amount that is slightly higher than the deal that Hyflux had earlier struck with would be white knight SM Investments, which did not go through.

According to the managing director of Utico, Richard Menezes, “The aim is to save time and move expeditiously as both Utico and Hyflux, investors and creditors are aware of the fact that time is of essence in preserving the value of the Singaporean company and arrest further slide.”

Utico also bared its plan of offering the cash equivalent of a 4 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,” Mr Menezes said.

The offer from Utico includes “a S$400 million commitment to Hyflux by Utico, to ensure it remains a going concern and also to grow the business, along with further commitment to Hyflux’s retail perpetual securities and preference (PNP) shareholders”.

He added in the statement that the goal is for Hyflux and Utico “to enter into a definitive agreement on the proposed investment with the approval of senior creditors at the earliest and hold a town hall for both PNP and medium-term note holders” before August 2, which is when Hyflux’s next hearing is scheduled.

On July 11, the two firms announced that they had undertaken “informal discussions” and were on the way to firming up the S$400 million binding deal, subject to obtaining approvals from all stakeholders. This means an investment of S$300 million as equity and a S$100 million shareholder loan.

This proposed deal, according to Utico, will infuse a much-needed transfusion to the embattled water treatment firm, as well as put the two companies with their combined capabilities in a stronger position.

“Utico’s unique development, technical and financing abilities would also further enable Hyflux to exploit the opportunities in the Middle East, Asia, and Africa as well as other global markets where water demand is increasing, requiring innovative solutions,” Mr Menezes said.

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.” / TISG

Read related: Utico extends Hyflux signing deadline to June 27, requests town hall for shareholders by July