SINGAPORE: Beleaguered water treatment firm Hyflux on Friday (Nov 2) said it has made a court application to seek "super priority" status for rescue financing from its Indonesian investors.
The application to the Singapore High Court was done on Thursday, it announced in a filing to the Singapore Exchange on Friday night.
Hyflux, which is undergoing a court-supervised debt restructuring, said on Oct 18 that it has secured a proposed investment of S$530 million from a consortium made up by Indonesia's Salim Group and Medco Group – a potential lifeline for the embattled firm if it obtains the approval of creditors and local authorities.
On top of that, the consortium will provide a S$30 million debtor-in-possession (DIP) loan ahead of the proposed equity investment to help Hyflux meet its working capital requirements.
Pursuant to the terms of the DIP loan agreement, Hyflux said in the latest SGX filing that it has made an application to the court under Section 211E(1) of the Companies Act for this loan to be secured by “way of first priority fixed charges” over certain properties of the company.
These include all of the company’s ordinary shares in HyfluxShop Holdings, all of its 6 per cent cumulative non-convertible non-voting perpetual preference shares in the capital of HyfluxShop Holdings, alongside all of its shares in two wholly-owned subsidiaries Spring China Utility and NewSpring Utility.
Under Section 211E, the court can grant rescue-capital providers “super priority”, or seniority claims, on a company's assets over existing creditors.
Further details on this application will be provided when the court has given its directions, Hyflux said.
Seen as one of Singapore’s most successful business stories, the water treatment firm made the unexpected move on May 22 to apply for a court-supervised process to reorganise its business and liabilities, citing "prolonged weakness" in the local power market for its cash woes.
After obtaining a six-month moratorium from the High Court in June, it actively sought new financing with strategic investors.
The company was also on the lookout for buyers for its Tuaspring Integrated Water and Power Plant, which analysts said was key to trimming Hyflux's "humongous" debt load.
Of its S$2.95 billion of liabilities, S$265 million is owed to medium-term note holders and another S$900 million to investors of perpetual securities and preference shares. The latter is a big group of 34,000 people, with many of them being retail investors.
With the moratorium set to expire on Dec 18, the company's legal advisors from WongPartnership told the Singapore court on Wednesday that Hyflux intends to seek an extension of the debt reprieve until April.
In a separate SGX filing late that day, Hyflux elaborated that it may do so “at the appropriate juncture” before the proposal of a scheme of arrangement to its creditors.
As for its Tuaspring plant, WongPartnership lawyers said the company will continue negotiations with its largest secured lender, Maybank.