Hyflux to ask court for further 3-month reprieve from creditors

Sias president says he was told new plan is to keep perp and pref shareholders whole as equity rather than debt


HYFLUX wants more time to try to return to solvency and plans to file an affidavit to the Singapore High Court soon to give it an additional three-month reprieve from creditor claims.

The request is being made days before the water cleaning firm's court-sanctioned protection from creditors expires on April 30.

David Gerald, president of the Securities Investors Association (Singapore), said he was told by Hyflux's advisors in a private meeting on Monday that "there is a credible plan where the senior unsecured creditors, perpetual and preference shareholders will be much better off than in a liquidation".

The new plan is to keep perp and pref shareholders whole in Hyflux's books as equity rather than debt. This will only be viable if Hyflux's interest payments to its perp and pref holders are lowered or suspended for a number of years or perpetuity. No specific details have been shared yet by Hyflux.

Mr Gerald said: "According to the advisors, for the new plan to materialise, the company will need at least three months, which I support in the interest of all retail investors."

Many Hyflux investors are sceptical.

Martin Lee, a perp, pref and ordinary shareholder, said: "While this seems like a positive development, there have been so many twists and turns in this Hyflux saga that I think it is better to wait for details before giving comments on the merits of the new deal."

Another investor who declined to be named said: "To me, I prefer a liquidation. Unless they have gotten a true white knight, then don't bother... It's just financial engineering."

After Hyflux's planned rescue deal with Indonesia's Salim-Medco deal fell through earlier this month, Hyflux is slated to lose its largest asset, Tuaspring.

National water agency PUB has issued a notice to seize the Tuaspring desalination plant, while secured lender Maybank intends to appoint receivers to the Tuaspring power plant. No money is expected to flow through to other creditors in the event of a forced sale.

Meanwhile, Hyflux has appointed dealmaker Nicky Tan to help it find a new distressed investor.

One medium-term note holder, who wanted to identified as May, told The Business Times that she is disappointed with how Hyflux's restructuring process has been run and the poor flow of information to retail investors.

She said: "Hyflx said they would touch base with creditors and stakeholders (after the Salim deal fell through) but we haven't heard from them. They've only spoken to David Gerald.

"If you give them another three months extension what can we see? We're paying for all these advisors' expenses every day and their fees are not cheap. And there is cash burn every day, is that fair?"

Hyflux declined to comment to BT on its cash burn.

Asked by BT if he had raised these questions during the meeting with Hyflux's advisors on Monday, Mr Gerald said: "I did not think it was appropriate to raise this today, I will take it up later at the more appropriate time."