Hyflux's white knight proposes changes to pot for adviser fees prior to court hearing

Singapore

AHEAD of an upcoming court hearing, Hyflux's white knight Utico has adopted a carrot-and-stick approach, proposing to either increase or decrease the pot for adviser fees, depending on whether the scheme receives the necessary support from all advisers at the hearing on Jan 29.

In a letter dated Jan 28 to the water treatment firm, Utico said it would raise the pot for adviser fees to S$50 million if it receives support from all advisers for the Hyflux scheme and restructuring agreement (RA) at the court hearing.

On the other hand, the pot would decline from S$40 million - as per the RA - to S$30 million if the advisers fail to support the scheme at the hearing.

Utico's own advisers' fees are separate and do not come from the S$50 million pot, it clarified.

Middle Eastern utility provider Utico is offering a S$400 million rescue package to debt-ridden water treatment firm Hyflux, having inked the RA on Nov 26 last year.

It added: "Securities Investors Association (Singapore) advisers will be treated in a special manner if their work and effort results in P&P (perpetual securities and preference shares) votes as and when necessary, considering they are a Junior Group and has Utico's special separate efforts."

The proposition for the adviser pot hinges on completing the scheme by April this year with the support of all advisers, Utico said in the letter.

Utico also said that it will not look at exercising its right to exit the RA as long as the scheme is supported by all advisers at the court hearing.

This comes as Hyflux's board of directors is understood to have already sent letters to all advisers with a minimum haircut of 25 per cent on all valid adviser fees. Some advisers are said to have rejected Hyflux's proposal and have stated that they will not support the scheme and the RA.

Under the RA, all adviser fees were due to be capped at S$40 million. A sticking point was that the pot would have to cover a success fee of up to S$25 million payable to Hyflux adviser nTan Corporate advisery if the restructuring is successful, according to an earlier Debtwire report.

If an approved scheme with the support of all advisers is not received, "Utico cannot continue to commit to a process of a moving goal post or a moving date for a company under moratorium with losing value and maintain the same valuation, payment terms and conditions, or the overall recovery to all stakeholders", Utico warned.