SM Investments not endorsing Hyflux’s current rescue deal

Salim-Medco (SM) Investments has stated that it does not endorse on the current rescue deal that Hyflux plans to put to a creditors’ vote in the upcoming scheme meeting on April 5.

The Indonesian investor group that offered a S$530 million lifeline in exchange for a 60% stake in Hyflux once all its debts are cleared said on Thursday the ‘allocation set out in the schemes of arrangement proposed by Hyflux is not agreed. Therefore, the schemes do not satisfy the conditions of the restructuring agreement.’

SM Investments stated that it recently became aware of new material information on Hyflux that significantly increases the working capital requirements of the group.

The current allocation from Hyflux has not been agreed upon by the investor, and does not satisfy the conditions of the existing deal, it claimed.

‘In light of the new material information disclosed to SM Investments, it has been reviewing the allocation of the investment for the working capital requirements of the Hyflux group. This will in turn affect the amount available for settlement to creditors.’

Had this material information been disclosed earlier, it would have been taken into consideration in the allocation previously discussed with creditor groups, the investor said.

‘Under the restructuring agreement (signed on October 18 last year), the allocation of the investment between working capital and the amount available for settlement to creditors is to be agreed between Hyflux and SM Investments,’ it added.

Hyflux notes some disagreements with investor, but will proceed on scheme meetings

The statement from SM Investments is in contrast with water treatment firm Hyflux’s comments earlier this week and Hyflux has disputed the reasoning from its white knight investor to excuse itself from the restructuring agreement deal agreed in October.

Hyflux did state that it has several disagreements with the investor, but it stressed that it has the intention to proceed with the scheme meetings scheduled next month.

Read more on Singapore’s water agency to take over Hyflux’s Tuaspring plant if defaults not resolved.

Hyflux had said that the S$271 million it plans to carve out from SM Investment's potential cash injection to settle its debts with creditors was agreed upon by SM Investments prior to the publication of the schemes on February 16 and called the recent claims from the investor a ‘belated assertion’.

Hyflux added that it has tried but has been unable to meaningfully engage with the investor. It will, pursuant to contractual obligations, use reasonable endeavours to ensure the necessary conditions under the restructuring agreement are satisfied in order for the investment to proceed.

Read more on Hyflux takes S$916 million impairment hit for first nine months of 2018.

Location change to accommodate a larger attendance for upcoming scheme meeting

To cater to a larger number of attendees, Hyflux will be changing the location for its upcoming scheme meeting on April 5 to The Star Performing Arts Centre, The Star Theatre at 12 noon for banks, noteholders, trade creditors and contingent creditors, and at 7 pm for holders of perpetual capital securities and preference shares.

The attendees will be putting to a vote on the firm’s restructuring plan during the meeting.

The firm has previously reiterated its intention to proceed with the scheme meetings scheduled on April 5 and April 8, as well as the extraordinary general meeting to approve the terms of the investment on April 15.