Hyflux debt moratorium extended for 2 months to August 2, firm in talks with potential investors

On Wednesday, the Singapore High Court granted debt-ridden water treatment firm Hyflux and its three subsidiaries two more months of reprieve from their creditors.

Hyflux had asked for a four-month extension on its debt moratorium, but the longer extension was denied as Justice Aedit Abdullah felt that further extensions should be ‘more controlled’. Even so, he told Hyflux to focus on assuring its investors and if progress continues to be made, the date may be extended beyond the set date.

The order was passed as the previous court-sanctioned protection from creditors was due to expire on Wednesday.

Justice Aedit said he hopes for a continued engagement with all stakeholders, in particular, the perpetual securities and preference shareholders and the perpetual securities trustee.

In a timetable revealed by Hyflux’s chief executive Olivia Lum in a May 27 affidavit read in a Singapore High Court on Wednesday, the firm said it is having talks with seven different parties for a potential cash infusion.

With the new investor, Hyflux would then proceed to engage with various stakeholders to come up with a new scheme of arrangement for its rescue deal, and aim to apply for leave to convene the scheme meetings for creditors in July.

The scheme meetings will then be held in late August and the firm plans to complete the court-sanctioned restructuring process in September.

One of the seven parties is United Arab Emirates utility firm Utico, whereby the firm is having advanced discussions with over the terms of a binding term sheet for a S$400 million investment. Utico has given Hyflux a deadline until June 17 for a binding agreement to be signed.

Hyflux is also in advanced discussions with Mauritius-registered Oyster Bay Fund for a possible investment of S$500 million. There was no disclosure on who runs Oyster Bay Fund, only that the fund is an independent third party.

WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux, said the firm will select one investor to enter into a binding agreement by the middle of June.

The Court has told Hyflux to provide creditors cashflow updates on a monthly basis and also to provide a detailed breakdown on the running costs of the firm over the course of its restructuring.

According to Mr Sandrasegara, Hyflux’s monthly running costs have fallen by 60% since March last year, in part due to the letting go of employees and the giving up of its premises.

The earlier S$530 million rescue deal between Hyflux and Indonesia’s SM Investments was called off last month, after both parties could not agree on the ‘allocation set out in the schemes of arrangement’ of the rescue deal that was then laid on the table.

Read more on Hyflux sues SM Investments over aborted bailout.