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Utico issues Hyflux 48-hour ultimatum

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Utico, through its financial advisers, has issued a 48-hour ultimatum, ending at 5pm today, for Hyflux to agree to its version of a restructuring agreement, saying it would pull out otherwise, a Hyflux lawyer said.

This comes after the Middle Eastern utility was told that both Hyflux and its creditors required further negotiations on several key terms, including "allocations to senior unsecured creditors, and other matters requiring Utico's consent", Mr Manoj Sandrasegara, a partner with WongPartnership said.

"Naturally, Hyflux's advisers will get in touch with Utico's team of advisers to try and work this out," he added. In the meantime, Hyflux is engaging with two other parties on an investment," Mr Manoj said.

Hyflux's debt moratorium, which is slated to expire on Dec 2, cannot be extended unless there is at least an investor who is engaged, he said.

When asked, he declined to identify the potential investors, citing confidentiality. But he added that one investor, through its lawyers, had informed Hyflux it would make a debt restructuring proposal this week.

Hyflux had said in May and June that it had received separate non-binding letters of intent for investments by Mauritius-registered Oyster Bay Fund and a Chinese power service provider.

Back then, the firm said that in addition to talks with Utico for a $400 million investment, it was also in talks with Oyster Bay Fund for up to $500 million.

Utico representatives issued no comment on the reason for the ultimatum.

The original proposed rescue package involves Utico taking an 88 per cent stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan.

Last week, Utico threatened to shrink its proposed $300 million to $200 million if Hyflux does not sign a restructuring deal by this week. - THE STRAITS TIMES

BUSINESS & FINANCE