Hyflux to seek 3-mth debt moratorium extension ahead of Apr 30 deadline

HYFLUX wants more time to try to return to solvency, and plans to file an affidavit to the Singapore High Court soon to give it an additional three-month reprieve from creditor claims.

The appeal is being made days before the embattled water treatment firm's court-sanctioned protection from creditors expires on Apr 30.

David Gerald, president of the Securities Investors Association (Singapore), said he was told by Hyflux's advisers in a private meeting on Monday that "there is a credible plan where the senior unsecured creditors, perpetual and preference shareholders will be much better off than in a liquidation".

The new plan is to keep perp and pref shareholders whole in Hyflux's books as equity rather than debt. This will only be viable if Hyflux's interest payments to its perp and pref holders are lowered or suspended for a number of years or perpetuity. No specific details have been shared yet by Hyflux, though an announcement is expected later on Monday night.

Mr Gerald said: "According to the advisers, for the new plan to materialise, the company will need at least three months, which I support in the interest of all retail investors."

However, some Hyflux investors are sceptical.

Martin Lee, a perp, pref and ordinary shareholder, said: "While this seems like a positive development, there have been so many twists and turns in this Hyflux saga that I think it is better to wait for details before giving comments on the merits of the new deal."

Another investor, who declined to be named, said: "To me, I prefer a liquidation. Unless they have gotten a true white knight, then don't bother... It's just financial engineering."

After Hyflux's planned rescue deal with Indonesia's Salim-Medco conglomerate fell through earlier this month, the company is slated to lose its largest asset, Tuaspring.

National water agency PUB has issued a notice to seize the Tuaspring desalination plant, while secured lender Maybank intends to appoint receivers to the Tuaspring power plant. No money is expected to flow through to other creditors in the event of a forced sale.

Meanwhile, Hyflux has appointed dealmaker Nicky Tan to help it find a new distressed investor.

One medium-term noteholder named May told The Business Times (BT) that she is disappointed with how Hyflux's restructuring process has been run, with a poor flow of information to retail investors.

She said: "Hyflux said they would touch base with creditors and stakeholders after the Salim deal fell through but we haven't heard from them. They have spoken only to David Gerald.

"If you give them another three-month extension, what can we see? We're paying for all these advisers' expenses every day and their fees are not cheap. And there is cash burn every day, is that fair?"

Hyflux declined to comment to BT on its cash burn.

Asked by BT if he had raised these questions during the meeting with Hyflux's advisers on Monday, Mr Gerald said: "I did not think it was appropriate to raise this today. I will take it up later at a more appropriate time."