SINGAPORE: United Arab Emirates utility firm Utico said on Friday (Jun 12) that it has agreed to give Hyflux more time until Jun 30 to consider its revised offer.
In a press statement, Utico also revealed that two parties have "approached it to partner for (the) acquisition of Hyflux and grow Utico". These parties, which it did not name, have interests in the Gulf region, United Kingdom, Singapore and Indonesia.
They have offered to acquire Utico shares, which could value the company up to US$1.5 billion, the Middle Eastern firm said. Its senior management is currently studying these proposals.
READ: Hyflux and directors under criminal investigation for suspected false and misleading statements
Hyflux and Utico signed a S$400 million restructuring pact on Nov 26 last year.
The deal was to be completed within six months, that is May 26, but various hurdles stood in the way, ranging from disagreements over the payment of adviser fees to an unexpected change in Hyflux’s legal team. The scheme meetings for creditors to vote on the deal also had to be postponed because of the COVID-19 outbreak.
As the deal lapsed, Utico issued a letter to Hyflux on May 26 that it wanted to change the terms of the deal and replace all cash payments for Hyflux creditors with stocks in both companies. It gave Hyflux until Jun 4 to consider this.
Hyflux said in a bourse filing three days later that its restructuring deal with Utico had "ceased". However, it said, it remained in talks with the Middle Eastern firm and was studying the latter’s revised offer.
Hyflux wrote to Utico on Jun 4 to seek clarifications, noting that the revised offer had "changed significantly" from the restructuring deal. It raised “substantial consternation and concern” from various stakeholders and asked for an extension of the revised offer's deadline, according to bourse filings released late on Jun 10.
Utico replied on Jun 10 to agree to an extension until Jun 30 with no further moratorium extensions as a “primary requirement”, the same bourse filings showed.
Among other conditions, it added that it wanted the entire Hyflux board “to step down immediately on scheme passing and stand in interim thereafter to allow for smooth transfer”.
The Middle Eastern suitor also clarified that small investors holding on to Hyflux’s perpetual securities and preference shares (P&P) would still qualify for a cash payout if the deal is accepted before Jun 30. Large investors will be paid in shares.
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
In a “formal announcement” issued to the media on Friday, Utico said: “Utico has agreed to extend the deadline to its Nov 26 restructuring agreement with Hyflux, which expired on May 26, to Jun 30, 2020.
"The extension till Jun 30, 2020 with additional terms gives the senior creditors same recovery, improves the P&P recovery, and gives relief to the shareholders and lenders of Oman and Algeria IWP SPVs.”
Regarding the proposals it received from the interested parties, Utico said it was “comfortable to close (the Hyflux) transaction on its own but will study the propositions as creditors, Hyflux, Singapore court and SGX move to close the scheme and get the stock traded".
BANK CREDITORS APPLY FOR CARVE-OUT
Separately, a group of bank creditors has applied to the High Court to ask to be carved out of Hyflux’s debt moratorium.
According to bourse filings issued late on Thursday following a case management conference, the High Court has ordered the unsecured working group made up of seven lenders to serve its affidavit on Hyflux by Friday and a redacted version of the affidavit on other creditors by next Tuesday for the application.
The banks are Mizuho Bank, KfW IPEX-Bank, Bangkok Bank, BNP Paribas, Standard Chartered Bank, CTBC Bank and The Korea Development Bank.
The same group of lenders had applied for a carve-out from the moratorium in May last year so as to file an application to have Hyflux and Hydrochem placed under judicial management.
It failed to get the green light then as the court noted that Hyflux made a credible case in that granting the carve-out would have an adverse impact on the company’s restructuring efforts and ongoing projects.
But Justice Aedit Abdullah also said then the banks were given the liberty to file the application again based on the progress of the restructuring, adding that he would “leave the sword hanging above Hyflux’s head”.
READ: Middle East investor Utico says it ‘remains committed’ to rescue deal despite Hyflux criminal probe
Hyflux’s next pre-trial conference is scheduled to take place either on Jun 19 or 22 “where further directions will be issued regarding the main reorganisation process and any applications by any of the creditors”, the filing said.
This comes more than a week after authorities said they had 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.
Hyflux’s court-sanctioned debt moratorium, which grants it reprieve from creditors, will expire at the end of next month.