Utico ‘signs and releases’ restructuring deal with Hyflux
It says restructuring deal will give it 88% stake
United Arab Emirates-based utility provider Utico said it has "signed and released" a restructuring deal with Hyflux which will give it 88 per cent of the distressed water treatment firm.
The deal, which Utico said is worth up to $535 million, "finds a resolution for creditors and PNP investors and development projects that have been languishing since the moratorium in May 2018", the utility said yesterday.
It added "swift action" will be taken to bring all projects up to speed and take on new projects.
But Hyflux yesterday declined to comment, saying that an announcement will be made in a filing with the Singapore Exchange. The Securities Investors Association Singapore (Sias) said it has not seen any signed deal.
Hyflux earlier said it would engage exclusively with Utico, with whom negotiations have been the most advanced compared with other suitors, until Aug 26, the deadline for parties to agree to a firm deal.
The deal sees Utico taking the 88 per cent stake in Hyflux through a $300 million equity injection and a $100 million shareholder loan.
Asked how much each creditor class could get, Utico chief executive Richard Menezes said senior creditors stand to receive $250 million, while $100 million is earmarked for business growth and working capital.
The Hyflux retail perpetual securities and preference (PNP) shareholders could get between "$50 million minimum to $150 million on the high side depending on the options they choose".
But a failed deal earlier this year with SM Investments (SMI), an Indonesian consortium formed by Salim Group and Medco Group, has left a sour aftertaste.
Some analysts are sceptical if the Utico deal, which is subject to creditors' approval, will go through, citing talk that some senior lenders have asked the utility for proof of funds, third party guarantees as well as details of how the restructuring plan will be implemented.
iFast senior fixed-income analyst Ang Chung Yuh noted: "After what happened with SMI, they want third party guarantees to provide assurance that once the deal is signed, it is binding on all parties."
And even if the deal does go through, it is anyone's guess whether Hyflux will survive, he added.
But something is better than nothing, and Utico does offer a chance of a new lease of life, said Associate Professor Lawrence Loh, director of the Centre of Governance, Institutions and Organisations at the National University of Singapore Business School.
But first, the restructuring plan has to be approved by at least 50 per cent in number and 75 per cent in value of each creditor class.
Unsecured creditors such as banks and medium-term noteholders make up one creditor class; perpetual securities and preference shareholders make up another.
Ordinary shareholders also need to give their approval.
And that may be the greatest hurdle for now, given the competing interests among the various creditor groups, he added.