Court grants winding-up order for Hyflux
Claudia Tan HS
THE Singapore High Court on Wednesday granted an order to wind up beleaguered water-treatment company Hyflux, while former white-knight suitor Utico was ordered to pay S$5,000 to the judicial managers (JMs).
The firm's JMs - Patrick Bance and Hamish Alexander Christie of Borrelli Walsh (BW) - were appointed as Hyflux's liquidators. Following that, the JM order was discharged.
This follows a hearing via Zoom before High Court Justice Aedit Abdullah, on an application filed last month by Hyflux's JMs from BW after restructuring negotiations with potential investors had fallen through.
Hyflux's winding-up hearing, initially set for July 12, was adjourned after Utico made a last-ditch attempt to intervene with the liquidation process.
The court heard that the Securities Investors Association (Singapore), also known as Sias, was supportive of Utico's attempt to present a viable restructuring proposal. However, Utico was unable to meet the minimum conditions stipulated by Sias.
Sias had written to Utico on July 15, shortly after the last hearing, to ask that several minimum commitments are met so that Sias could help canvas the support of perpetual and preference (PnP) shareholders for Utico's potential application to either intervene with the judicial management or object to the winding-up.
Among the conditions was for Utico to place a non-refundable deposit of S$10 million in Utico's solicitor's account or an escrow account by 10am on July 21 to confirm its plans to restructure Hyflux. This deposit was to be released to Hyflux for working-capital purposes upon a court grant to extend the judicial management. However, Utico had not satisfied any of the minimum commitments required by Sias, the court heard.
Sias had also offered to help Utico reach out to PnP holders who may be interested in selling some of their holdings, but Utico turned down the offer, saying that it did not want to "bypass or discredit the other investors whose debt Utico did not buy".
Hyflux's JMs, represented by lawyers from Fullerton Law Chambers with help from Senior Counsel Kenneth Tan, had asked for Utico to pay the JMs S$6,000 for the time spent on submissions following Utico's intervention on July 12.
Utico had, through its lawyers from Braddell Brothers, said that its actions were for the benefit of creditors, providing them with additional material to consider before the hearing. It had asked that no cost orders, or a cost order of not more than S$2,000 to be awarded.
Taking into consideration the complexity of what was required, Justice Aedit ordered Utico to pay a cost of S$5,000 to the JMs.
Hyflux was founded in 1989 by Olivia Lum and was known for its water-treatment and desalination technologies. The firm started feeling ripples of troubles between 2014 and 2016, following its foray into the energy business through the Tuaspring desalination plant.
The plant chalked up losses amid low electricity prices and a challenging macro environment, while Hyflux continued to borrow heavily from investors through the issuance of perpetual securities.
In the face of mounting debt, the group had in May 2018 applied to the Singapore High Court to commence a court-supervised debt restructuring. Hyflux was subsequently put under judicial management after repeated extensions of the debt moratorium.
In January this year, the JMs had been in talks with several potential investors but none were conclusive.
By May, BW said that it had received seven bids: one bid for an investment in the entire group; and six bids for specific assets of the group, which can be facilitated through a winding-up of the group.
On June 4, BW said negotiations with the investor for an investment in the entire Hyflux Group were unsuccessful, and that "a restructuring is not possible". They added that "the continuation of the judicial management of the company is no longer necessary" and that the remaining value of Hyflux would be "best realised in a liquidation".
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