HYFLUX has a last chance for a firm conclusion to one of the current three deals on the table, as Justice Aedit Abdullah on Wednesday agreed to grant adjournment to the judicial management application.

 

A hearing will be conducted " no earlier than three weeks" from now, the judge said.

 

But this was after he chastised Hyflux' s lawyer Nish Shetty from Clifford Chance Asia for making a last-minute request for an adjournment at the start of Wednesday' s hearing.

 

Justice Abdullah described Mr Shetty' s actions as " taking the court for granted" and said that " hairdressers and dentists do seem to get more notice than me about cancellations" .

 

At the virtual hearing on Zoom, he ordered Mr Shetty and Tan Kok Quan Partnership lawyer Eddee Ng, who represents the unsecured working group (UWG) of creditors, to meet him physically in court.

 

There, Mr Shetty explained that the various new developments in the last 48 hours - including a new expression of interest (EOI) from American fund manager Strategic Growth Investments (SGI) on Monday - had led to his request.

 

But in remarking on the repeated requests for extensions to Hyflux' s debt moratorium without better progress shown in closing a restructuring deal, Justice Abdullah said: " Suspicion is building up considerably whether there is some sort of gamesmanship going on here."

 

This echoed Mr Ng' s views. He too argued in court that his clients - Mizuho, Bangkok Bank, BNP Paribas, CTBC Bank, KfW, Korea Development Bank, and Standard Chartered Bank - were against the adjournment.

 

He referred to numbers detailed in its affidavit that showed how " powerless" a state Hyflux is in. " There is no more time," he said. " They (Hyflux) are diminishing the chances of a successful JM ... This is nothing more than a cynical attempt to reduce the ability of any JM to be able to do his work."

 

The UWG holds 55.56 per cent of the senior unsecured debt of Hyflux and 57 per cent of the senior unsecured debt of Hydrochem.

 

To this, Mr Shetty replied that a JM would take into account the interests of all the stakeholders, not merely the UWG' s, and Pison' s offer should be given a chance. " As at January this year, (a liquidation analysis by EY was) looking at a liquidation value of between two and six cents, so if the deal were to be done, even the UWG would be better off."

 

There are currently three offers on the table. In the latest from SGI, the fund manager will invest at least S$204.8 million, if it progresses. Senior unsecured creditors will get the lion' s share of S$97 million, trade creditors S$15.8 million, and the perpetual securities and preference shares investors S$32 million - all on a pro-rata basis.

 

The other two offers are from Middle Eastern utility firm Utico and Pison, the investment vehicle of Indonesian magnate Johnny Widjaja.

 

The latest update from Pison as at Sept 25 was that it has received 164 tender application forms in its proposed debt purchase programme, has accepted about 140 of them, and is " in the process of finalising several more" .

 

No other creditors objected to an adjournment, although a few hoped for a shorter extension as Hyflux' s restructuring process has already dragged on for more than two years.

 

The MTN holders' lawyer wanted more clarity on what Pison' s deal offers to subordinated creditors and how professional adviser fees will be resolved.

 

The lawyer for Securities Investors Association (Singapore), or Sias, also hoped that the adjournment would enable the EOI from SGI, which was introduced by Sias to Hyflux, to be developed into a " comprehensive" restructuring plan. Sias did not support a JM at this juncture as this may impede discussions with SGI.

 

A date for the next hearing will be arranged by the registry and conveyed to the lawyers. Meanwhile, Hyflux' s debt moratorium was similarly extended until the next hearing date.

DISTRESSED water-treatment company Hyflux has disputed several statements made by its Emirati suitor Utico in a letter published over the weekend, including that various groups of creditors are working with Hyflux and Utico in tandem, and that Utico is the only potential investor with a firm binding offer.

 

Mainboard-listed Hyflux, in a regulatory statement to the Singapore Exchange on Tuesday, publicly disagreed with Utico' s version of events related to its restructuring efforts.

 

Hyflux denied being aware of Utico having discussions with the unsecured working group (UWG) of banking creditors, and also questioned the veracity of Utico' s statement that there was a firm binding offer from the Emirati suitor.

 

Also, it is not true that the " UWG would like to ensure parallel engagement with the perpetual securities and preference shares (PnP) investors and an offer prior to UWG acceptance" , said Hyflux. It said it has not made such a statement in the affidavits filed for the judicial management hearing.

 

The court will be hearing the UWG' s application to place Hyflux under judicial management on Wednesday.

 

Hyflux rejected Utico' s " unwarranted insinuation" that the company has said that dealing with the PnP holders and Securities Investors Association (Singapore) is a " waste of time" .

 

" We have stated time and again that any restructuring deal must include the PnP holders who are, in our view, an essential group of creditors whose concerns must be taken into account and addressed by any potential investor," wrote Hyflux.

BELEAGUERED Hyflux has received a formal expression of interest from an American fund manager to invest at least S$204.78 million, said the water treatment company in a regulatory filing two days before an application to put it under judicial management will be heard.

 

Delaware-based Strategic Growth Investments (SGI) proposed that the funds to be injected as newly issued common equity into Hyflux, and to be applied to settle all debts, claims and liabilities of the group.

 

Senior unsecured creditors will get the lion' s share of S$97 million, trade creditors S$15.78 million and the perpetual securities and preference shares (PnP) investors S$32 million - all on a pro-rata basis, proposed SGI.

 

Also, it was proposed that S$60 million from the investment to be set aside for working capital and any future corporate restructuring, based on the value creation plan designed and implemented with SGI' s advisers.

 

This announcement to the Singapore Exchange made on Monday by Hyflux came just two days before the High Court hears the judicial management application by the unsecured working group of banking creditors.

 

Also, Hyflux' s latest suitor SGI is prepared to offer up to 15 per cent of the equity in the treatment company post-investment in the form of warrants, with 5 per cent of the equity going to the senior unsecured creditors and 10 per cent to the PnP holders.

 

With the assumption of the successful implementation of SGI' s value creation plan, the value of the equity warrants could be worth about S$196.7 million for the senior unsecured creditors and S$393.3 million for the PnP holders, according to expression of interest letter.

 

According to SGI, its principals have invested in, owned and created value for various companies across several verticals, including technology, industrials/manufacturing, infrastructure and energy.

 

HYFLUX has asked its Middle Eastern suitor Utico to address concerns flagged by creditor groups before a virtual townhall can be held for the water treatment firm' s perpetual securities and preference shares (PnP) investors.

 

In a letter to Utico that was released to the Singapore Exchange late Friday night, Hyflux independent director Lau Wing Tat said: " Hyflux' s position is that, prior to any such townhall being organised, Utico should first set out clearly how it intends to deal with concerns raised by the various creditor groups and if necessary, provide revised terms for the creditors' consideration." In this way, the townwall will be useful and will not waste time and resources, Mr Lau added.

 

Mr Lau also highlighted in the letter that the Securities Investors Association (Singapore), or Sias, does not intend to endorse Utico' s offer based on its current terms, and that Utico has yet to convince the medium-term note (MTN) informal steering committee and/or the unsecured working group (UWG) to support Utico' s current offer.

 

Hyflux' s letter made reference to an earlier letter from Utico on Oct 9. In that letter, Utico requested for a virtual townhall to be arranged by Hyflux with investors of the firm' s PnP on either Saturday afternoon or Sunday evening.

 

In the letter, Utico noted that Sias had received " few responses" to their letter to P& P on Sept 25, which was based on Utico' s offer on July 23. Of those who had responded, " majority have accepted Utico' s proposal" , the Middle Eastern utility provider said, adding that the July offer does not release Hyflux' s directors, deeming it acceptable based on a condition put forward by some respondents.

 

The suitor went on to highlight that it has been the only party to conduct two townhalls for P& P holders, of which the first was attended by some 450-500 people and the second by about 50-70 people. " Majority (of) respondents/participants have accepted Utico' s proposal," Utico said in the letter.

 

Utico added: " We also noted from the recent Hyflux affidavit, it states Pison (Investments) has made an offer to P& P. This is contrary to the Sias letter of Oct 7. This may also be explained." Pison and Aqua Munda are other potential Hyflux suitors.

 

On Oct 10, Utico followed up Hyflux' s letter with a statement that was released to the media. In the latest statement, Utico reiterated that it remained ready for a virtual townhall on Sunday evening.

 

" Hyflux (on Saturday) delayed the P& P virtual townhall to give Pison time to make an offer to P& P working with Sias. However, Sias issued a letter to Hyflux on Oct 7 that there are no offers to P& P than than Utico," Utico said in the statement.

 

" It is interesting to note that as per Hyflux' s own statement, UWG has asked Pison to ensure P& P agrees to their offer, prior to UWG engaging with investors including Pison," Utico went on to say.

 

" Three representative sample votes from P& P have given majority approval for Utico' s offer so far - the only approvals Hyflux has received for any offer to P& P," Utico added.