Potential Hyflux investor Johnny Widjaja says funds earmarked for deal; will address PnP holders

Singapore

JOHNNY Widjaja, who is making an offer to rescue Hyflux, is no stranger to Singapore - having attended primary and secondary school here.

The director of Singapore-incorporated Pison Investments made a formal offer earlier this month for the senior debts of beleaguered water treatment company Hyflux. But little was known about this businessman from Indonesia when he first expressed his interest in June.

Mr Widjaja, a 57-year-old Jakarta resident, told The Business Times that he had studied here before moving to Taiwan for pre-university education and later the United States for undergraduate studies majoring in finance.

He joined his father's construction and property company in 1985 but left to be a church minister from 2005 to 2018. Now, as the chief executive of property investment firm Havilah, Mr Widjaja said he is developing a 6,000 hectare coastal industrial estate in Java. He said Hyflux is a good fit for this venture because water treatment services are required for the industrial estate.

Mr Widjaja said he had in fact made contact with Hyflux's CEO Olivia Lum back in 2018, when the company first applied for court protection from creditors.

Nothing has come out of that call, but he has been following Hyflux's restructuring efforts since.

"I thought one of (the prospective investors) would be successful in taking over Hyflux," he said. "Now, it's the right time for me to step in."

He argued that having waited to make his offer, he can now "buy it cheaper".

Mr Widjaja has set aside S$200 million to purchase some of Hyflux's debts and to provide working capital to the group. The offer made through Pison will be conducted via a reverse Dutch auction. Debt holders will offer to sell their debts to Pison at a discount, and Pison will buy up the debt in order of which sellers offer the highest discounts. Debt is purchased till the money set aside for the purchases is exhausted, thus incentivising debt holders to accept larger haircuts.

Pison's deal is subject to a minimum offered discount of 91 per cent. The deadline for senior unsecured creditors to offer their debts to Pison is 5pm on Aug 17. Pison then has until 5pm on Sept 25 to accept these offers. The long-stop date on the deal is Dec 31. (see amendment note)

Mr Widjaja is confident that his proposal will be accepted even though Pison's offer is not as good as Aqua Munda's. The latter, which has also expressed interest in saving Hyflux, has offerered to buy back debt in a reverse auction at a minimum of an 85 per cent discount.

But Mr Widjaja said he is the only potential investor that has earmarked funds for the deal.

He added that he is focusing at present on engaging the creditors of senior debts so that the deal could be completed within the timeline. But he also said he intends to address the concerns of the 34,000 holders of Hyflux's perpetual securities and preference shares (PnPs) in the last quarter of this year - after the close of Pison's proposed deal with senior creditors.

He said he has engaged with the Securities Investors Association (Singapore) or Sias over the subordinated creditors. This is even though he can take the company out of insolvency without having to make any payments to these PnP holders.

Sias had asserted on Sunday that it will not support any plan to rescue Hyflux that lacks a concrete proposal to resolve the debts due to the holders of PnP.

Amendment note: A previous version of this story incorrectly stated the deadline for senior unsecured creditors to accept the offer as 5pm, Sept 25. They in fact have till 5pm on Aug 17 to offer their debts to Pison, and Pison then has till 5pm on Sept 25 to accept these offers.