Hyflux expecting net cash outflows; Sembcorp, Keppel, YTL said to eye Tuaspring

Singapore

SEMBCORP Industries, Keppel Corp and Malaysian generator YTL Power International are reportedly among 22 potential white knights interested in Hyflux's Tuaspring desalination plant, which had a book value of S$1.47 billion as at the end of March (see amendment note).

Hyflux on Friday also said that it is expecting a net cash outflow in the short to medium term, and that the 22 potential rescue financiers had until Friday, Aug 3, to submit expressions of interest (EOI).

For the 13 weeks from July 30 to Oct 22, the water-and-power company and its subsidiaries are expecting total net cash outflow of S$22.25 million.

All in, Hyflux's net cash outflow for the six-month period to year's end is estimated to total S$43.2 million.

According to the group's profit forecasts, Hyflux Limited is expected to record a post-tax profit of S$6.22 million for the July to December 2018 period; Hyflux Engineering's profit is estimated at S$5.4 million.

But losses are expected from the rest of its key subsidiaries: Hydrochem (S) is expected to incur a six-month loss of S$39.07 million; Hyflux Membrane Manufacturing is expected to lose some S$13.34 million, and Hyflux Innovation Centre, S$248,000.

Hyflux has previously indicated that it is seeking about S$200 million in rescue financing.

As at July 31, 22 non-disclosure agreements (NDAs) had been signed with potential rescue financiers.

Hyflux and its advisers have held preliminary talks with 15 of these potential rescue financiers, and intend to do the same with the remaining seven.

After Aug 3, Hyflux will review financiers who have submitted their EOIs and shortlist suitable candidates with which to continue negotiations.

Separately, Bloomberg on Friday reported that Sembcorp Industries, Keppel Corp, and YTL Power are interested in acquiring the Tuaspring project, which includes South-east Asia's largest desalination plant.

Asset sales are now key for the cash-strapped company, which had S$2.95 billion worth of liabilities as at March 31. Of that amount, S$900 million is debt owed to perp and preference shareholders.

Just last month, the firm said it was in touch with eight bidders, but had yet to receive any firm offers.

Chief executive Olivia Lum said then: "We all know that under these conditions, when the power market is weak, it is very difficult to get good value. But it also cannot be so unreasonably low that I can't even pay my stakeholders."

The company started a court-supervised reorganisation process in May, and has obtained a debt moratorium, which grants the firm a six-month reprieve from creditors.

Shares in Hyflux have been suspended, and last traded at 21 Singapore cents apiece on May 18.

Amendment note: Due to an editing error, an earlier version of this story said that Hyflux had a book value of S$1.47 billion. It is in fact Hyflux's Tuaspring that had this book value, and the article above has been revised to reflect this.