Court extends Hyflux debt moratorium to end of April 2019

Singapore

HYFLUX has convinced a Singapore High Court to extend its debt moratorium by four-and-a-half months to April 30 next year, despite arguments from some bank creditors that the insolvent firm should be kept on a tighter leash.

Justice Aedit Abdullah granted Hyflux the extension after hearing arguments from both sides on Monday.

Tan Kok Quan Partnership lawyer Eddee Ng, on behalf of five banks, had argued for the moratorium to be extended to Jan 16, 2019.

Under the restructuring timetable put forth by Hyflux, it should be clear by mid-January if Hyflux has been able to get all creditor groups on board or not, Mr Ng said: "The company should be kept on a very tight leash in so far as time is concerned."

The informal steering committee of Hyflux medium-term note (MTN) holders agreed. But WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux, argued for more time.

"I think it's quite hard for us to do negotiations with a gun to our heads," he said.

Mr Sandrasegara asked for court protection to be extended until April 30. That is the same long-stop date fixed by the Salim-Medco consortium, which has offered to put cash into Hyflux in exchange for a strategic stake.

Justice Aedit agreed. Hyflux's next case conference will be held in the week of Jan 21, 2019 at the latest.

By January next year, Hyflux plans to apply to the court to summon a meeting of its creditors to propose a scheme of arrangement. Creditors will be split into respective classes to vote.

To pass, the scheme needs to be approved by at least 75 per cent in value and 50 per cent in number of each creditor class. It is not clear yet if retail perp and pref shareholders will be grouped together or separately.

If any class of creditors dissents, Hyflux can still proceed with the restructuring, so long as a majority in number of creditors representing 75 per cent in value of creditors meant to be bound by the scheme gives the go-ahead.

In total, Hyflux's subordinated perp and pref shareholders are owed S$900 million, while senior unsecured creditors including MTN holders and banks with contingent claims are owed about S$1.9 billion.

No secured creditors will be bound by the scheme. The Maybank debt, secured by Tuaspring, will not be part of the scheme.

In court on Monday, Justice Aedit noted that many retail investors are closely following the Hyflux case.

One retail investor had written to him to voice concerns "about the situation and where things are going", including concerns about possible write-downs, the judge noted. He said: "I understand their concerns but I think my role, my function and powers under these applications isn't that wide.

"The court in its proceedings under the restructuring regime is (mainly) concerned about the propriety of the sanctioned schemes of arrangement, and the scope for the court to go into questions of substance of any kind isn't really that wide."

Justice Aedit urged Hyflux to address retail investors' concerns during discussions and townhall meetings that are expected to be conducted as early as January next year.