Another potential Hyflux investor emerges; Utico says will consider 'soft landing'

HYFLUX has received a letter from Longview International Holdings expressing its interest in investing in the troubled water treatment firm with a joint venture (JV) partner.

The JV partner is an “undisclosed major Chinese entity”, Hyflux said in a bourse filing on Wednesday afternoon.

The proposed terms of the investment have not been made available to Hyflux. Longview’s letter invites Hyflux to engage with the JV to explore the terms on which the JV may be prepared to invest.

Longview is a Singapore-based holding company which provides consulting and research services to life sciences firms as well as associated investment entities, according to its website.

Including the Longview JV, there are now three suitors for debt-ridden Hyflux. Singapore-registered Aqua Munda had emerged last December as a fresh face in the saga, offering to buy over some of the noteholders and unsecured creditors' debts. Aqua Munda recently extended the deadline for its offers to be accepted, to April 24.

Separately, potential white knight Utico on Wednesday issued a press statement reiterating that it “will consider” paying holders of Hyflux's perpetual securities and preference shares (PnP) a certain amount, referred to as a “soft landing”, even if the Emirati utility firm lists after two years from Hyflux’s restructuring.

It was responding to a request from the Securities Investors Association (Singapore), or SIAS, for clarification on the proposed scheme terms of Utico’s rescue deal for Hyflux.

Under the current scheme terms, PnP holders who choose the second option in the package will receive the cash equivalent of a 4 per cent stake in Utico if the Middle Eastern firm lists within two years of the completion of Hyflux’s restructuring.

At the Jan 20 town hall for PnP investors, Utico had told attendees that even if its initial public offering occurs after the two-year period, it will still consider providing the soft landing option for PnP investors. SIAS had thus sought confirmation that Utico now agrees to provide this option, and how much the amount will be.

On Wednesday, Utico confirmed that it had made that statement during the town hall, although it did not disclose the soft-landing sum it might pay.

Utico “will consider a soft landing for PnP holders, if it serves the larger good and gets the scheme passed and closed by April 2020”, the potential Hyflux white knight said in a press statement on Wednesday.

“However, this can be assessed only after the PnP holders vote for option one or two as offered by Utico for the past seven to eight months,” it added.

The firm thus urged SIAS and Hyflux to put its offer to vote within two to three weeks. Once there is clarity on how many and what value of votes have been cast in favour of the scheme, Utico will then be able to set the soft landing option as a separate class for PnP holders who choose option two. This will also allow Utico to categorise those who choose option one as one class, it said.

“Those who don’t want to exit with option one and are willing to wait for two years or more, could then get a (clearer) offer for the soft landing option,” Utico noted in its press statement.

Utico emphasised that it will consider PnP holdings only on a per-account basis. It had stated during the town hall that if a PnP investor holds securities through more than one account, the investor will receive up to S$1,500 per account. This means that an investor with PnP holdings through three banks will stand to receive S$4,500, for instance.

SIAS also asked two weeks ago whether Hyflux chief executive Olivia Lum and Hyflux directors who have PnP holdings will give up their entitlements under the proposed scheme for the benefit of the other PnP investors.

In response, Utico on Wednesday said that Hyflux shareholders or directors had earlier forfeited their investments in the PnPs or medium-term notes publicly through a March/April 2019 statement.

The onus now lies on the Hyflux directors to release a statement if they are withdrawing this forfeiture, Utico noted. The Middle Eastern firm may consider the directors as part of its offer if they make such a statement.

Utico said on Wednesday that it is still “not clear” about this issue, and thus maintains its current position that its offer is not open to Ms Lum and Hyflux directors.

The scheme meeting for creditors will be held by April 1, 2020. Thereafter, an extraordinary general meeting will be held for shareholders of Hyflux to approve the deal. The completion of the restructuring is expected by April 30, 2020, if given the green light.