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Other white knights waiting in the wings, says Hyflux's lawyer

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Unlike the former deal with SM Investments, there have been regular stakeholder meetings involving Utico, and Hyflux had obtained an "in-principle buy-in" on the commercial terms of a scheme of arrangement from senior unsecured creditors. In the SM Investments' deal, negotiations with creditors started only after the restructuring agreement had been signed. The deal eventually fell through.

However, Utico said in a statement last Friday that Hyflux still had not signed the definitive restructuring agreement, although Utico had inked it on the Aug 26 deadline. Utico claimed that Hyflux's board and its advisers have "refused" to guarantee that they will stop any "leaking of value" in the event the extension is granted by the court.

Referring to Utico's statement, Mr Sandrasegara said it showed that talks with Utico had not stalled. "I think they're telling everyone that they're still there and they have not walked away."

"Because the creditor term sheet is at such an advanced stage, it might be an easier discussion (to negotiate with the current investor) than (with) a new investor... We'll use it as a priority to bridge current disagreements over the quantum of scheme consideration... And we will negotiate very strongly with the investor Utico and also to resolve some of the other outstanding issues in the restructuring agreement."

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Points of difference in Hyflux's negotiation with Utico include the total scheme consideration. An amended agreement from Utico in early September had introduced changes with which Hyflux disagreed, Mr Sandrasegara said.

An agreement should be reached within two to three weeks if the discussions succeed. That said, because Hyflux is no longer in an exclusivity arrangement with Utico, it is able to conduct concurrent discussions.

"In parallel, we will continue discussions with this (unnamed) investor, and I understand from the (company's) financial adviser, there are other investors who have popped up and we will do the negotiations in parallel, but the priority is still to conclude one with Utico."

During Monday's hearing, Hyflux gave updates on two major developments. The first was its TuasOne project, set to be Singapore's sixth waste-to-energy plant, the completion of which has been delayed because of the company's financial troubles.

Mr Sandrasegara said Hyflux and its joint-venture partner Mitsubishi Heavy Industries (MHI) have signed a non-binding term sheet for a novation of the engineering, procurement, and construction (EPC) contract to MHI. The latter will now take over the project through completion.

"We see that as quite positive to move things along," he said, adding that the National Environment Agency and lenders to the TuasOne project are supportive of this arrangement.

The other development was about the "substantial" realisation of receivables under an arbitration awarded to Hyflux last year, which will likely improve cashflow "tremendously". The company is still deciding how to use the proceeds.

Justice Aedit asked Hyflux to return to court for a case management conference on Oct 31 for a progress update on the rescue deal. Another hearing has also been scheduled for Nov 29.

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