SINGAPORE (Nov 26): Embattled Singapore water treatment firm Hyflux has finally signed a $400-million restructuring agreement with Middle Eastern utility player Utico FZC.
This comes days before debt-laden Hyflux is set to appear before the High Court on Friday to seek an extension on its restructuring moratorium, which is set to expire on Dec 2.
See: Hyflux wins yet another reprieve; debt moratorium extended again to Dec 2
An earlier rescue package involving Utico acquiring an 88% stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan had failed to take off.
Under the latest deal, 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.
Since April, Hyflux had been searching for a new white knight investor after an earlier rescue deal by Indonesia-based SM Investments collapsed.
See: Hyflux rescue bid by SMI falls through amid conflicting statements
Hyflux found itself on the brink of bankruptcy after it went on a debt-fulled expansion drive just as oil prices begin to collapse and Middle Eastern states began to cancel their infrastructure projects.
See: Rags-to-riches tale goes sour for Hyflux founder Olivia Lum
In 2013, it also opened the Tuaspring desalination and power plant which was built with more than $1.4 billion in bank loans as well as the sale of perpetual securities and an issue of preferred shares to 34,000 retail investors who now stand to lose almost all their money if the company went bust.
See: Hyflux scraps restructuring plan after spats with investors
Under the latest agreement, each holder of Hyflux preference shares and perpetual securities can choose from two options under the schemes.
In one option, each preference or perp shareholder can receive an upfront cash payment that is the lower of $1,500 or 50% of their holdings. The total principal amounts payable under this option will be capped at $50 million.
