SINGAPORE (Mar 28): Hyflux’s white knight SM Investments (SMI) has issued a statement saying it does not agree with the schemes of arrangement of proposed by the water company and that the schemes do not satisfy the conditions of the restructuring agreement.
The latest statement by SMI on Thursday throws the rescue deal agreed between Hyflux and SMI -- a consortium made up of Indonesian conglomerate Salim Group and energy giant Medco Group -- into jeopardy.
See: Hyflux's dispute with its rescuer deepens as deadlines near
See also: Hyflux woes spark Singapore protests, nationalisation calls
In a press statement on Thursday, SMI says it had recently became aware of new material information on Hyflux that significantly increases the working capital requirements of the group.
“In light of the new material information, SMI has been reviewing the allocation of the investment for the working capital requirements of the Hyflux group. This will in turn affect the amount available for settlement to creditors,” says SMI.
This month alone, notices of default have been issued to Hyflux’s Tuaspring desalination plant and its Magtaa desalination plant in Algeria as well as arbitration proceedings started by its Souk Tleta desalination plant JV partners, also in Algeria.
SMI says under the restructuring agreement, the allocation of the investment between working capital and the amount available for settlement to creditors is to be agreed between Hyflux and SMI.
Had the material information been disclosed earlier, SMI says it would have been taken into consideration in the allocation previously discussed with creditor groups.
“The allocation set out in the schemes of arrangement proposed by Hyflux is not agreed. Therefore, the Schemes do not satisfy the conditions of the Restructuring Agreement,” concluded SMI.
Last Oct, SMI came to the rescue of debt-laden Hyflux which was facing liquidation after failing to pay its creditors who have since submitted proofs of claims totalling $3.5 billion.
Under the rescue plan, Hyflux will get a $400 million equity injection in exchange for a 60% stake after its debts are cleared. SMI will also grant Hyflux a shareholder's loan of $130 million. Holders of Hyflux perpetual securities and preference shares, who are owed $900 million, will receive $27 million in cash and a 10.26% of the company.
However, Hyflux on Mar 8 announced it was amending the scheme of arrangement to make it more equitable to the holders after an appeal by investor advocacy group Securities Investors Association Singapore (Sias).
Hyflux's rescue deal will be put to the vote by creditors on Apr 5.
