SINGAPORE: Embattled water treatment firm Hyflux was granted another extension in its debt reprieve from creditors by the Singapore High Court on Wednesday (May 29).
With its court-approved moratorium due to end on Wednesday, Hyflux had hoped for an additional four-month leeway, but was denied by Justice Aedit Abdullah who felt that further extensions “should be much more controlled”.
The debt-laden company now has two more months until Aug 2 to work out possible rescue plans, marking its fourth moratorium extension since embarking on debt restructuring a year ago.
During the three-hour long hearing in a court room packed with lawyers, Hyflux provided updates on its search for new investors since aborting a rescue deal with Indonesian consortium SM Investments in April.
WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux, told the court that the company is in talks with seven parties.
One of them is United Arab Emirates utility firm Utico, with whom it is in “advanced” discussions over the terms of a binding term sheet for a S$400 million investment. The UAE utility firm has given Hyflux a deadline of Jun 17 for a binding agreement to be signed, the court heard.
Advanced negotiations are also underway with global multi-strategy investment fund Oyster Bay Fund over a possible investment of up to S$500 million, said Mr Sandrasegara citing a May 27 affidavit by Hyflux chief executive Olivia Lum.
Hyflux is also in touch with five other unnamed potential investors.
Apart from the previously announced suitor said to be a big desalination firm, they include a large player in Asia’s power sector, a foreign investment fund, an Asia-based nuclear and civil engineering contractor and a waste treatment firm.
Mr Sandrasegara said the company will “select one investor” to enter into a binding agreement by the middle of next month.
After which, it hopes to engage various stakeholder groups to knock out a new scheme of arrangement.
It is looking to file an application for leave to convene the scheme meeting in July, before engaging various stakeholder groups, seek regulatory approvals and hold the scheme meeting in August.
If all goes to plan, its court-sanctioned scheme will be completed by September, according to Ms Lum’s affidavit.
While laying out the company’s case for a four-month moratorium extension, Mr Sandrasegara stressed that its proposed timeline is a “compressed” one with plans already being “expedited”.
“We used the time wisely,” he said. “We have given a roadmap as to when and how we are going to progress ... The court should take that into account.”
But this proposed four-month leeway drew objections from some of the company's creditors.
A group of bank creditors, for instance, said Hyflux should be kept on a “tight leash” and be granted a moratorium extension of just 30 days.
These lenders consist of Mizuho Bank, KfW IPEX-Bank, Bangkok Bank, BNP Paribas, CTBC Bank, Standard Chartered Bank, as well as the Korea Development Bank and the Korea Development Bank Singapore Branch. Collectively, they are owed more than S$700 million.
This group, represented by Tan Kok Quan Partnership lawyer Eddee Ng, argued that Hyflux’s goal to sign a binding agreement with an investor by mid-June sets an “identifiable landing point” for when the extended moratorium should end.
Mr Ng also said that short moratorium extensions given to the company previously have not had any chilling effects on negotiations with investors.
“A one month timeframe will allow the company to be kept on tight leash. This is important given that the company already had 11 months of moratorium," he added.
Some questions were also raised about the company’s restructuring costs, such as the fees of its advisers, and the provision of updates about investors’ discussions.
Taking into account the arguments, Justice Aedit said he was “concerned about giving four months (extension) at a go”.
Still, he said that he is open to giving Hyflux a further extension in August if progress is made by then.
Justice Aedit also laid out several conditions, such as the continuation of weekly meetings with creditors, monthly updates about the company’s cashflow forecasts and a more detailed breakdown of payment to its advisers to be submitted to creditors and the court in two weeks.
Hyflux is also required to provide the court and creditors with a progress report on its discussions with investors in a month’s time.
The company, whose dramatic restructuring journey has been closely watched by tens of thousands of retail investors, will have its next court hearing at 2.30pm on Aug 2.