Hyflux secures Utico rescue deal
United Arab Emirates' utility will take a 95% stake in the water treatment firm
Hyflux has finally reached a restructuring agreement with Utico that will see the United Arab Emirates utility take a 95 per cent stake in the embattled water treatment firm in a $400 million rescue deal.
The announcement yesterday comes just days before a High Court hearing scheduled to determine if Hyflux can get an extension on its debt moratorium, set to expire on Dec 2.
Retail investors have also been offered payouts, though in some cases it could be worth just a fraction of their investment.
Hyflux founder Olivia Lum told reporters at a teleconference yesterday: "We just signed a restructuring agreement, we have to focus on completing the restructuring as soon as possible."
Under the deal, Utico will take a 95 per cent stake (including up to 7 per cent to be issued to independent placees) in Hyflux's enlarged share capital for $300 million.
These placees could include institutions and high-net-worth individuals. It will also extend Hyflux a working capital line of up to $100 million.
The proceeds will also be used to pay professional advisers' fees.
Utico, a developer of water and power infrastructure, and Hyflux plan to work to get creditors' approval of the restructuring terms over the next three to five weeks.
To pass, the schemes of arrangement need to be approved by at least 75 per cent in value and 50 per cent in number of each creditor class.
Mr Manoj Pillay Sandrasegara, head of restructuring at WongPartnership LLP and lead adviser for Hyflux, added: "The senior unsecured creditors are to be allocated $250 million in settlement of all the senior debt of Hyflux.
"The retail holders of perpetual securities and preference shares (PNP) would receive payment in the range of $50 million to $100 million."
He added: "I estimate that if everything plays out as planned, the scheme would be passed and implemented by Q2 2020."
Some 34,000 PNP investors, who are owed $900 million in total, can choose to either be paid upfront or be paid in half-yearly intervals over a four-year period.
The PNP holders who opt for upfront payment will be entitled to receive up to 50 per cent of the value of their debt securities holdings, capped at $1,500.
Those who opt for deferred payments, which will be paid in half-yearly intervals over four years, will be entitled to receive up to 50 per cent of the value of their debt securities holdings, capped at $1,500.
In addition, they will also receive a pro rata share in an additional cash payout. If all PNP holders elect the deferred payment option, the quantum of the additional cash payout will be $50 million.