Hyflux could get $535 mil lifeline from white knight Utico

Stanislaus Jude Chan

SINGAPORE (July 16): After months of high tension drama as it teetered on the brink of bankruptcy, Hyflux looks like it is finally going to be saved by a white knight investor.

United Arab Emirates utilities group Utico FZC announced Tuesday it is buying an 88% stake in the debt-ridden water treatment firm for as much as $535 million.

Utico also intends to offer the cash equivalent of a 4% stake in the enlarged Utico group plus additional cash payouts to the holders of preference shares and perpetual capital securities.

According to Utico managing director Richard Menezes, this could see Hyflux’s perpetual securities and preference (PNP) shareholders receiving “50% of their first $2,000 to $3,000 as well as a cascade and staggered deal to the rest, thus offering them options to exit and hope for full redemption”.

“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,” he adds.

Utico says it aims to enter into a definitive agreement on the proposed investment at the earliest, with the approval of senior creditors. It also plans to hold a town hall for both PNP and medium term note holders before the next court hearing on Aug 2.

Hyflux and Utico last week said it had held informal discussions and was progressing towards a deal, even after the extended deadline for entering into a binding agreement lapsed on June 27.

See: Hyflux says 'progressing towards a deal' with Utico as binding agreement deadline lapses

The Singapore High Court had allowed Hyflux’s debt moratorium to be extended to allow the troubled water treatment company to postpone debt payment even as creditors of the work on another plan to avoid liquidation.

This came after the previous rescue deal agreed upon between Hyflux and former white knight investor Salim-Medco Investments collapsed at the last minute.

See: Hyflux applies to extend debt moratorium by another three months; slapped with fresh claims of US$65 mil

Hyflux is said to have held talks with seven suitors after its deal with SM Investments fell through in April.

These include global multi-strategy investment fund Oyster Bay Fund, which offered to invest up to $500 million in Hyflux.

The Utico-Hyflux deal is subject to various regulatory approvals, as well as approval from creditors, the Singapore Stock Exchange, investors and the court.