There seems to be no resolution to the rescue deal between embattled water treatment firm Hyflux and its Middle Eastern suitor Utico FZC.
Hyflux, on Oct 11, received a letter from Utico asking the former to not delay its townhall any further than Oct 12, 6pm, since its offer “currently meets all conditions” pertaining to the directors of Hyflux and has “consistently met major approvals at three attempts for P&P vote, even with [its] latest July 23 proposal”.
See: Utico says Hyflux delaying townhall to give potential rival Pison time
P&P represent the holders of Hyflux’s preference shares and perpetual securities.
Utico has also accused Hyflux of breaching prior commitments to hold a townhall on Jan 20, 2020, as part of the restructuring agreement signed on Nov 26, 2019.
The United Arab Emirates-based company also confirmed its engagements with the unsecured working group (UWG) of bank lenders and MTN and have aligned that “that would be beneficial to all stakeholders”.
“For this the P&P is a critical stakeholder and cannot be considered as a ‘waste of time’,” the Utico’s managing director Richard Menezes wrote on behalf of the company.
Menezes added that Hyflux should refrain from citing Utico’s name that the unsecured working group (UWG) of bank lenders made an offer for half price to Utico.
The context of that discussion, says Utico’s Menezes, was for reaching a deal at that time based on the previous deal with SM Investments (SMI) which was close to $600 million. He added that Utico offered $250 million to senior unsecured creditors following the discussion and signed the same November agreement with Hyflux.
That deal was not consummated “due to several breaches by Hyflux and later due to delays and Covid-related changes keeping the value same or increased”.
The letter concluded with a note of surprise that “some parties” have chosen to offer themselves to Hyflux’s alternative investor Pison where “they have protected the Hyflux directors and Hyflux directors themselves have not given a disclosure of non association or agreement with Pison’s terms as the primary condition for acceptance”.
Hyflux, in turn, replied on Oct 12 without addressing these allegations. The company, did, however, point out that Utico’s statements made in its letter are “not befitting a potential investor which is interested in investing in Hyflux and advancing this restructuring”.
Hyflux also said that it is unaware of any discussions held with the UWG as well as the P&P holders.
The company added that Utico’s request to hold a townhall “at a day’s notice” is “not feasible or practical”.
See also: Hyflux suitor Utico says 'willing to walk away' from restructuring deal
“To ensure that such townhall is beneficial for the P&P holders, we will require Utico to inform us and the creditors how you intend to deal with the concerns raised by the various creditor groups and, if necessary, provide revised terms for the creditors’ consideration,” wrote Hyflux director Lau Wing Tat, on behalf of the company.
On the failure of holding a townhall as stipulated, Hyflux said that the November agreement has “ipso facto ceased and determined”, which makes Utico’s allegations “plainly incorrect”.
Rebutting Utico’s allegations that Hyflux said that dealing with the P&P holders and the SIAS are a “waste of time”, Hyflux said that they have reiterated “time and again” that “any restructuring deal must include the P&P holders who are… an essential group of creditors whose concerns must be taken into account”.
Lastly, on the subject of the offer put out by Pison Investments, Hyflux’s Lau made “no comments” except that it is “not appropriate for [the company] to take sides” as it is the “creditors who will need to decide which offer and investor they prefer”.
Hyflux, on Nov 26, 2019, signed a $400-million restructuring agreement with Utico where Utico and co-investors will acquire new Hyflux shares representing a 95% stake of the enlarged capital of the company for a total of $300 million. Hyflux will also get a working capital loan of up to $100 million.
See also: Hyflux finally signs $400 mil rescue deal with Utico and Hyflux suitor Utico eyes $500 mil Singapore IPO in 2 years
