SINGAPORE (Apr 4): Indonesian consortium SM Investments has aborted its proposed deal to invest in Hyflux, ending an agreement that was seen as a lifeline for the beleaguered water treatment company.
See: Total compliance in financial reporting, but was it misleading?
Hyflux said in a statement on Thursday that the deal with SM Investments, made up of Indonesia's Salim Group and Medco Group, had lapsed after the latter did not provide a written confirmation that it will proceed with the rescue deal, despite repeated requests by Hyflux to do so.
As a result, the planned scheme meetings on April 5 and 8 -- where minority investors are to vote for the deal -- have been cancelled, added Hyflux. The planned EGM on April 15 will also be cancelled as well.
SM Investments’ proposed $450 million rescue package would see minority investors of Hyflux’s perpetual securities get back just three cents in cash and seven cents worth of cash for every dollar they have put in.
See: Hyflux's perpetual security holders get back only 10% of investment in restructure
See also: Hyflux amends restructuring plan to give junior creditors higher recovery rate
However, over the past week, there were signs that the deal was breaking down. On March 28, SM Investments alluded to material information it claimed to be unaware of when it tabled the deal – a claim Hyflux denied.
See: SMI says Hyflux's schemes of arrangement 'do not satisfy' restructuring deal
The Public Utilities Board, Singapore’s national water body which buys desalinated water from Hyflux, also threatened to take over Hyflux’s key asset, the Tuaspring desalination plant, for zero dollars, claiming Hyflux had defaulted on its agreement.
See also: PUB to take over Tuaspring plant if Hyflux cannot fix defaults by April 5
In its latest update, Hyflux says it will “continue to relentlessly pursue all other viable strategic opportunities as part of the court-supervised reorganisation process.”
“The company intends to work closely with the key creditor groups and relevant stakeholders to find mutually acceptable bases to enable the company to pursue such alternative opportunities,” Hyflux adds.
