Deadline for Hyflux-Utico deal extended

United Arab Emirates utility Utico FZC has extended a deadline for entering into a binding agreement with debt-ridden water treatment firm Hyflux to June 27, according to a Singapore Exchange filing yesterday.

The new deadline is two days before Hyflux must update the High Court on its restructuring effort.

A town hall meeting with Hyflux perpetual securities and preference (PNP) shareholders will be arranged for the week of July 7 if the binding agreement is signed by June 27, Utico said last night.

Utico had earlier told Hyflux it wanted a binding agreement signed by Monday for its $400 million investment.

A Utico spokesman told The Straits Times yesterday: "The extension came after Hyflux submitted due diligence information, which could help advance the deal." He declined to provide more details.

Hyflux is in talks with at least seven investors for a potential cash infusion and told the High Court on May 29 that it planned to enter into a binding term sheet with one of them by the middle of this month. Its court-approved debt moratorium ends on Aug 2.

The firm, in a bourse filing after midnight last Saturday, said it had received a fourth non-binding letter of intent for a potential investment from a Chinese power provider, but declined to reveal details or if the company is one of the seven.

Utico said last night that the decision to extend the term sheet validity was made after negotiations between both companies' advisers and their senior management, including Hyflux founder Olivia Lum and Utico chairman Rashed Al Balooshi.

Utico wants to acquire Hyflux as a going concern, said managing director Richard Menezes.

Its board noted that the extension to June 27 was also in the interest of stakeholders, including creditors, clients and PNP investors.

"For all stakeholders, further loss of time and uncertainty will lead to greater losses in value as well," said Mr Menezes.

"This will ensure a clear road map with a viable business outlook for the company as opposed to now, in turn leading to the achievement of (a) successful restructuring."

Utico said it remains committed to a purported rescue deal to offer "part cash redemption" and also a hope for full redemption with a plan and exit option. The PNP investors are now trying to recover around $900 million invested in Hyflux.

"However, without a viable binding... agreement by both parties, full details can be revealed only later," Mr Menezes said.

"As a definite part of the overall deal, small investors of up to $2,000 to $3,000 could get 50 per cent cash redemption along with full redemption opportunity, while the rest of the investors could get a similar but staggered deal."

He added that Utico is in "a prime position to benefit from US$50 billion (S$68 billion) in independent utility project opportunities coming up in the Gulf Cooperation Council, particularly in the UAE, Saudi Arabia, Oman and other Middle East countries".