SINGAPORE: More than one week after it announced a S$530 million lifeline from Indonesian investors, Hyflux on Wednesday (Oct 31) said it intends to seek a four-month extension of its ongoing moratorium.
The moratorium, which grants the embattled water treatment firm a six-month reprieve from creditors, is set to expire on Dec 18.
Having an extension of the moratorium until April will allow Hyflux to “continue discussions with creditors and have time to propose a scheme of arrangement”, its legal advisors from WongPartnership told the court in an interim update.
When asked by Justice Aedit Abdullah about what the company hopes to achieve with an extended moratorium, lawyer Manoj Sandrasegara said he expects the scheme of application that underpins the restructuring to be passed by then.
Hyflux is also mulling an application for debtor-in-possession financing “either today or tomorrow”, added Mr Sandrasegara as he outlined upcoming steps in Hyflux’s ongoing court-supervised reorganisation.
On the sale of the company’s single largest asset – the Tuaspring Integrated Water and Power Plant – Mr Sandrasegara said Hyflux will need to continue negotiations with Maybank, its largest secured lender.
Maybank had earlier granted Hyflux’s request for more time and gave it an additional two weeks to find a buyer and execute a binding purchase agreement for the plant by Oct 29.
However, with the latest announcement of an investment from Indonesia’s Salim Group and Medco Group, Tuaspring will remain part of the company moving forward, according to Mr Sandrasegara.
“The deal is (to) have Tuaspring be part of the new Hyflux group going forward so there will be continued negotiations with Maybank on how this can be achieved,” he said.
CREDITORS WANT MORE INFORMATION
Also at the meeting in court, Hyflux continued to face criticism from some of its bank creditors – BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered that were represented by Tan Kok Quan Partnership – over insufficient disclosures on the reorganisation process thus far.
At the end, an agreement on a consent order was reached between the parties involved. Hyflux will share information, such as valuation analysis of specific assets, as well as short-term to medium-term cashflow forecasts, to all of its creditors via a so-called data room.
Details involving Tuaspring, however, will be excluded given confidentiality requirements.
Tan Kok Quan Partnership lawyer Eddee Ng spoke at length about how creditors need more information “to sufficiently assess” the restructuring process, particularly in this case when the moratorium is six months long.
“What happens if there is no proposal? What happens if it’s very clear that beyond a certain time, this is a restructuring that is going nowhere?”
He brought up ongoing projects like the TuasOne waste-to-energy plant, which has seen costs double “in just a matter of months” from S$85 million in May to S$172 million according to the latest affidavit filed this month.
Mr Ng added that based on the creditors’ own computations, Hyflux was seeing a “cash burn of S$1.7 million” per week since the reorganisation started.
“We are not talking about having information (to) audit the entire restructuring process,” he said. “We are just talking about visibility to be able to understand exactly where the company is going.”
In response, WongPartnership’s Mr Sandrasegara said: “We will disclose what is necessary at each stage of the proceedings.
"As of today, there is a deal on the table (and) they will need information to assess the viability of the deal that’s put forth. We agree with that but what we disagree with … is whether the company is stalling on information.
“And I have instructions to place on record that’s not true.”