Middle East investor Utico says it ‘remains committed’ to rescue deal despite Hyflux criminal probe

Middle East investor Utico says it ‘remains committed’ to rescue deal despite Hyflux criminal probe

Hyflux Singapore (1)
(Photo: Jeremy Long)

SINGAPORE: United Arab Emirates utility firm Utico said it "remains committed" to a S$400 million rescue deal with Hyflux, a day after authorities in Singapore launched criminal investigations into the troubled water treatment firm and its directors.

“Utico remains committed to the restructuring agreement signed on Nov 26, 2019 with (Hyflux) and its letter offer on May 26, 2020, which ensures the highest recovery to creditors and the P&P (perpetual and preference shareholders),” a spokesperson said on Wednesday (Jun 3) in response to CNA’s queries.

"We hope the concerned stakeholders will work in parallel to ensure that the criminal proceedings only help in cleaning the company and … hasten the restructuring of the company by preserving its value."

Doing so will “give quick relief to all affected parties”, Utico added in its emailed reply.

READ: Hyflux and directors under criminal investigation for suspected false and misleading statements

The police's Commercial Affairs Department (CAD), the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA) said on Tuesday that they have launched a joint investigation into Hyflux and its current and former directors for suspected false and misleading statements and breaches of disclosure rules, as well as potential non-compliance with accounting standards.

This followed a more than year-long review that “disclosed reasons to suspect that offences may have been committed”.

“The investigation will ascertain whether there were lapses in Hyflux’s disclosures concerning the Tuaspring Integrated Water and Power Project, as well as non-compliance with accounting standards between 2011 and 2018,” the joint statement read.

The authorities also said they are probing directors who served on the company’s board between 2011 and 2018, but stopped short of naming them.

According to the company’s website, its current board of directors are founder-CEO Olivia Lum, lead independent director Teo Kiang Kok, as well as five other non-executive independent directors Gay Chee Cheong, Lee Joo Hai, Christopher Murugasu, Lau Wing Tat and Gary Kee.

Six of them, with the exception of Mr Lau, served on the board between 2011 and 2018. Mr Lau was appointed to the board in July 2014, replacing Mr Rajsekar Kuppuswami Mitta, who left the board in 2012 after having served as non-executive independent director since April 2007.

Mr Simon Tay, who joined the board in May 2011, also served as non-executive independent director of the company until his resignation on Feb 7 this year.

READ: Utico’s move to replace cash offer with stocks a ‘bombshell’ for Hyflux retail investors: SIAS

READ: Hyflux says deal with Utico has ‘ceased’; studying revised offer and pursuing other investor options

The authorities stressed that the criminal investigations are “separate from (and) are not intended to interfere” with Hyflux’s ongoing corporate-rescue process.

The former star company began a court-supervised reorganisation process in May 2018 after an ill-timed venture into the energy business left it saddled in debt.

About two years on, a concrete survival plans remains nowhere in sight with uncertainties now bubbling over its agreement with Utico.

Utico said in a letter on May 26 that it would replace all cash payments for Hyflux creditors with stocks in both companies, as the rescue pact expired after six months.

Three days later, Hyflux confirmed the deal has “ceased” and said that while it is studying Utico's revised offer, it is also exploring other investor options.

One of them is Singapore-based Aqua Munda, which indicated on Tuesday its interest in acquiring Hyflux’s senior debt, as well as preference shares and perpetual securities.

Adding that it is committed to helping the water treatment firm complete its restructuring, the little-known potential investor said it is ready to provide up to S$10 million “by way of loan or otherwise on terms and conditions to be mutually agreed” if Hyflux secures an extension of its moratorium beyond end July. 

Source: CNA/sk(mi)

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