JUL 13, 2020 08:05 PM

PISON Investments, which previously expressed interest in investing in beleaguered water-treatment firm Hyflux, said it is focused on the launch of the invitation and on completing the purchase of eligible debts as soon as possible.

The investment vehicle of Indonesian magnate and chief executive of PT Havilah, Johnny Widjaja, made a formal cash offer for the debt of Hyflux' s bank lenders, note holders and other senior unsecured creditors last Thursday.

On Monday, Mr Widjaja said in a statement that the company would like to assure  perpetual securities and preference (P& P) holders, share holders and other stakeholders that it is aware of the tight timelines and the pressure on Hyflux to undertake and complete its debt restructuring exercise.

" Our objective in undertaking the invitation (and if successful) is to facilitate an expedited-basis debt-restructuring exercise that is fair and equitable for all stakeholders," he said.

He added that while the company has not addressed the perpetual capital securities and preference shares, it intends to engage with P& P holders through the Securities Investors Association Singapore and its advisors as soon as it can after the close of the invitation.

Mr Widjaja has set aside S$200 million to purchase the debts and  to provide working capital to the group. His offer is subject to a minimum offered discount of 91 per cent.

If he is able to buy out all the senior debt, he can retire  Hyflux&rsquo s debts at a discount and take the company out of insolvency without having to make any payments to holders of Hyflux' s perpetuals and preference shares (PnP).

Separately, Hyflux said in a statement on Monday that it has received Mr Widjaja' s statement and will make the appropriate announcements when there are material developments.

Unnamed investor has desalination projects plans in China, prepared to give Hyflux working capital

 

YET another unnamed investor is stalking Hyflux.

 

The company said on Thursday that it has received a letter of interest from Singapore-incorporated Unilegend Investments on behalf of a client.

 

Unilegend did not name its client but said that its focus is on clean energy and water. Unilegend representative Peng Chun-Sheng wrote: " Our client has plans to carry out seawater desalination projects in Shandong and Tianjin in China and sees great synergies with Hyflux."

 

The client is prepared to provide working capital for Hyflux if it completes the investment either by becoming a substantial shareholder of Hyflux or by owning the group' s debt, he said. " We also wish to state that we would not consider making this investment if Ms Olivia Lum and her current management and board of Hyflux are removed, or if the Hyflux Group is placed into judicial management or liquidation."

 

Hyflux chief executive Ms Lum, together with the group' s current and former directors, are under investigation by the Singapore police and financial regulator for suspected false and misleading statements and breaches of disclosure rules that may have taken place over a period of years.

 

Some of Hyflux' s creditors - Bangkok Bank, BNP Paribas, CTBC Bank, Mizuho, KfW, Korea Development Bank, Standard Chartered Bank and ESR-Reit - want to replace Ms Lum and her team with judicial managers. Their applications to be carved out of Hyflux' s debt moratorium will be heard in the High Court on July 27.

 

While Unilegend mulls an investment, other investors have made offers to Hyflux' s senior unsecured creditors to buy their debt at a discount.

 

On Thursday night, PT Havilah chief executive Johnny Widjaja made a formal cash offer for the debt of Hyflux' s bank lenders, note holders and other senior unsecured creditors through his vehicle, Pison Investments. PT Havilah is currently developing a coastal industrial estate in Java.

 

The price for any offered debt purchased will be determined via a reverse Dutch auction, which is the opposite of a conventional auction, as potential sellers make the bid rather than the buyer. The bids start low and go higher until the money set aside for the purchases is exhausted.

 

In this case, Mr Widjaja has set aside S$200 million to purchase the debts and to provide working capital to the group. His offer is subject to a minimum offered discount of 91 per cent. The deadline for senior unsecured creditors to accept the offer is 5pm on Sept 25. The long stop date is Dec 31.

 

If Mr Widjaja is able to buy out all of the senior debt, he can retire Hyflux' s debts at a discount and take the company out of insolvency without having to make payments to holders of its perpetuals and preference shares (PnP).

 

His offer is largely similar to an outstanding offer by special purpose vehicle Aqua Munda, which is offering to buy the senior debt at a minimum discount of 85 per cent in a reverse Dutch auction. Aqua Munda has committed S$208 million to make the purchases as well as to fund Hyflux' s capital requirements in addition to the debt buyout, if agreed.

 

However, the two offers differ in one key detail. Mr Widjaja' s offer is conditional on Ms Lum and Hyflux' s other current directors and senior executive management remaining in office. This was not a condition of the Aqua Munda offer.

 

The offer document from Pison Investments shows that Mr Widjaja is building Patimban Industrial Park, an approximately 6,000 hectare development in Java that is located by a new international deep sea port, with plans for a new power plant and a water treatment plant. As for Aqua Munda, it has not disclosed its source of funds.

 

Separately, Emirati utilities group Utico said on Thursday that it still wants to engage with Hyflux to work on a restructuring plan after its earlier offer lapsed.

 

In its new proposal, Utico will subscribe for S$340 million new shares in Hyflux for a resultant

 

70 per cent equity stake, which works out to an equity valuation of S$485 million for Hyflux, Utico chief executive officer Richard Menezes told The Business Times. Of the S$340 million, around S$275 million in cash will be used as part of a cash and stock deal to settle Hyflux' s outstanding debts, including payment to the PnP holders.

 

The remaining S$65 million will be used as working capital and to pay Hyflux' s advisers, Mr Menezes said. One of Hyflux' s restructuring advisers, nTan Corporate Advisory, will also get a 5 per cent stake in Hyflux.

 

Details of Utico' s latest offer have been sent to creditors, he said. However, Hyflux has not formally announced this update from Utico to the Singapore Exchange, where the updates from Unilegend and Pison were posted.

HYFLUX announced in a regulatory filing on Friday that it has received a letter from Johnny Widjaja, who expressed interest in investing up to S$300 million in the group in the most " expedient manner possible" - including buying up the existing debt of the group.

The Business Times (BT) understands that Mr Widjaja is a businessman from an Indonesian industrial company. 

This comes after  bank lenders sought to put Hyflux under  judicial management (JM) and Hyflux remains at odds with potential investor  Utico over whether last year&rsquo s restructuring agreement is still on the table. Utico is a utilities firm from the United Arab Emirates. 

According to the filing, the letter stated that once Mr Widjaja becomes the substantial shareholder of the company or the owner of the said debt, he is prepared to provide S$100 million of working capital to the group. 

The detailed terms of the proposed investment are still not available. 

Mr Widjaja  further stated, among other things, that he would not consider making this investment if the current management of Hyflux, including Olivia Lum and the board of directors are removed, or if any member of the group is placed into judicial management or liquidation.

He also provided a letter from an Indonesian bank to confirm that he has the necessary funds available and is willing to use the funds for the investment in the company. 

Hyflux said that it will  be engaging with Mr Widjaja and/or his advisors to obtain further information regarding the terms of his proposed investment.