Utico gives Hyflux up to Aug 16 to ink a definitive deal

Court grants Hyflux two extra months on its debt moratorium; Utico CEO Richard Menezes says Hyflux's value is falling


UTICO wants debt-ridden Hyflux to sign a definitive agreement for a rescue deal by Aug 16, failing which it will walk, the Emirati utilities group said on Friday.

Richard Menezes, chief executive of Utico, told reporters: "We are a millimetre away from signing, it's up to them... The value of Hyflux is falling."

The TuasOne waste-to-energy plant is Hyflux's "crown jewel" he said, but it will only begin commercial operations next year and needs more money next month, which Utico has agreed to provide, he added: "We met NEA (the National Environment Agency) today in the morning, and NEA said they will support it as long as there is funding for next month. They are running out of money at the project level."

Mr Menezes was speaking to reporters at the end of a Singapore High Court session on Friday, during which Hyflux appealed for more time to cure its insolvency. Mr Menezes did not speak in court but observed the session from the public gallery.

Hyflux had hoped to get its debt moratorium extended till the end of November, but Justice Aedit Abdullah gave Hyflux only two more months. Hyflux can seek a further extension at the next court hearing on Sept 30.

Justice Aedit said he wanted to see Hyflux file an application to convene creditor scheme meetings by September before allowing the case to drag on.

"If it doesn't work out in the next few months (with either Utico or other potential investors) I think I'll pull the plug."

Unlike the failed Salim-Medco deal in which Hyflux first signed a definitive agreement with the potential investor before negotiating the finer details only to reach an impasse, the approach it has taken with Utico is different.

Various stakeholder groups are engaging directly with Utico, said WongPartnership lawyer Manoj Sandrasegara, representing Hyflux.

"While the definitive agreement is being negotiated, the allocation is being negotiated simultaneously as well, in terms of what goes to creditors and what goes to capital needs," said Mr Sandrasegara.

"We are optimistic that when the definitive agreement is signed, we can move forward quicker because by that time the allocations should have been agreed."

Utico has agreed to take an 88 per cent stake in Hyflux through a S$300 million equity injection and a S$100 million shareholder loan.

So far, only Hyflux's unsecured working group (UWG) of financial creditors - namely BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank, Standard Chartered Bank and CTBC Bank - have not agreed with the commercial terms of the restructuring, though other lenders like DBS Bank are supportive.

The UWG said it had not received any proof of funds from Utico, even though Mr Menezes said that the proof had been provided.

Asked by The Business Times if he could explain what his proof of funds entailed, Mr Menezes said: "We can explain that later."

Utico has previously said that its cash injection into Hyflux will be funded by a mixture of debt and equity.

While Utico is planning an initial public offering (IPO) in two years, it will not depend on its IPO to fund the deal, Mr Menezes said.

"We're not depending on that. This deal is funded," said Mr Menezes, who has been in Singapore four times over the last three weeks.

On Thursday night, Mr Menezes met a "reflective sample" of around 60 of Hyflux's retail perpetual and preference shareholders through the assistance of the Securities Investors' Association (Singapore), Mr Sandrasegara said.

Mr Menezes said Utico was "well received" by retail investors at the three-hour meeting, and that SIAS will share more on the options Utico has put forth for perp and pref shareholders soon.

"I can only say that at the end of the meeting there was applause," Mr Menezes said.