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SINGAPORE: Hyflux Ltd., in its third year of a debt restructuring process, supports a plan proposed by Strategic Growth Investments LLC to acquire and privatize the Singapore-based water treatment company in a transaction that includes an injection of cash of 208 million Singaporean dollars ($ 154 million).
The firm will work with SGI to “facilitate the adoption and implementation of this proposal by various stakeholders in a timely manner,” said Lau Wing Tat, director of Hyflux, in a presentation to the Singapore exchange on Friday.
A settlement could help end the city-state’s most prominent debt restructuring case, which began in May 2018. Hyflux’s debt includes bank loans and bonds held by 34,000 retail investors. Despite being approached by multiple suitors, the company has failed to reach an agreement and has requested several extensions to its debt moratorium.
Hyflux faces claims totaling approximately S $ 2.79 billion, of which about S $ 1.03 billion comes from holders of its perpetual equity securities and preferred shares, SGI’s term sheet shows. Banks are owed S $ 630.7 million, according to the document.
Under the proposal, SGI would pay S $ 155 million to certain creditors, set aside S $ 53 million to place under Hyflux’s control for “contingent claimants” and provide S $ 60 million for working capital, it says. The agreement also includes new issues of shares and convertible securities.
The term sheet is valid for 60 days, at which time all related parties will issue and sign a binding letter of intent.
SGI aims to close the deal within 60 days of executing the letter of intent, it said.
SGI will terminate the deal if Hyflux goes into receivership, mainly because that would likely result in a lengthy process, said Michael Hong, chief investment officer for the US firm, in a letter to Hyflux CEO Olivia Lum, also submitted to the exchange on Friday.
The process is a form of debt restructuring in which an independent administrator is appointed to oversee the affairs, business, and ownership of a company in financial distress.
On October 15, the Singapore High Court warned Hyflux about the extension of its restructuring process and said there would be no further postponements of a hearing to decide whether it should be placed under judicial control. The next hearing is November 16.
Founded by Lum and once heralded for its desalination technology in Singapore, a country that had long depended on importing water and harvesting rainwater, Hyflux’s expansion into the power supply business led to a growing debt that he could not pay. That left some 34,000 retail investors in the lurch and sparked a rare public outcry in Singapore. – Bloomberg
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