Hyflux receives letter of intent for S$400m investment; banks seeking judicial management

HYFLUX has received a non-binding letter of intent for a possible S$400 million injection from an owner and developer of water and power utilities based in the Middle East, the troubled water treatment firm said in an exchange filing on Thursday.

The potential investment will be used for equity and working capital purposes, as well as possible urgent interim funding. Discussions are ongoing with the potential investor, who has a "reputable track record", said Hyflux, without identifying the entity.

Hyflux is also engaging with other potential overseas investors on their interest in its business and assets, including parties "that would have synergy with" Hyflux, it noted.

Meanwhile, a group of unsecured banks are seeking leave from the High Court of Singapore to file applications for Hyflux and Hydrochem to be placed under judicial management and/or interim judicial management, Hyflux said in the same filing on Thursday.

These banks are Mizuho Bank, KfW IPEX-Bank GmbH, Bangkok Bank Public Company, BNP Paribas, CTBC Bank, The Korea Development Bank as well as The Korea Development Bank Singapore Branch.

They applied on April 24 to the Court to vary the debt moratoriums currently in force in respect of Hyflux and Hydrochem.

Judicial management is a rescue procedure to restructure a distressed company's debt. An independent judicial manager is appointed to take control of the company's affairs, business and property, in an attempt to help it survive, get a scheme of arrangement approved or a more advantageous realisation of the company's assets versus that in a liquidation.

The latest developments in the Hyflux saga come on the same day the company's applications for another extension on its moratorium will be heard by the Court at a case management conference, just days before Hyflux's court-sanctioned protection from creditors expires on April 30.

On April 23, Hyflux and three of its subsidiaries applied to the Court for an additional three-month reprieve from its creditors while it works on another plan to avoid liquidation.

Hyflux is undergoing a court-supervised reorganisation process, where it retains control to reorganise its liabilities and businesses by proposing its own schemes of arrangement with the creditors. Its total liabilities stood at S$2.95 billion as at end-March 2018.

The company's S$530 million rescue plan with would-be white knight, Indonesia's Salim-Medco, fell through earlier this month.

The new plan to return to solvency is to keep perpetual and preference shareholders whole in its books as equity rather than debt. This will only be viable if the group's interest payments to its perp and pref holders are lowered or suspended for a number of years or perpetuity.