THE deal that embattled water treatment company Hyflux and its potential white knight Utico are progressing towards could be worth as much as S$535 million, said Utico in a statement on Tuesday.
The companies issued a joint statement on July 11 announcing the proposed investment from Utico could see the United Arab Emirates-based utility company invest in an 88 per cent stake in Hyflux for S$400 million - comprising S$300 million in equity injection and S$100 million in shareholder's loan.
In addition, Utico intends to offer the cash equivalent of a 4 per cent stake in the enlarged Utico group plus additional cash to holders of Hyflux's perpetual securities and preference (PNP) shareholders.
On Tuesday, Utico said that the equity valuation of Hyflux is set at S$340 million and that the total deal value could be S$535 million, higher than an earlier failed deal of S$530 million that SM Investments (SMI) had proposed.
The Utico proposed investment, which is subject to regulatory and other approvals if the deal materialises, includes a S$400 million commitment to Hyflux to ensure it remains a going concern and also to grow the business, along with further commitment to the PNP shareholders. Hyflux will remain as a separate listed company with Utico owning 88 per cent, the statement said.
Utico chief executive Richard Menezes commented that the investment would also place Utico and Hyflux with their joint capabilities and abilities in a stronger position and also create synergies for cost savings and new offerings.
"Utico's unique development, technical and financing abilities would also further enable Hyflux to exploit the opportunities in the Middle East, Asia and Africa as well as other global markets where water demand is increasing requiring innovative and bespoke solutions."
SMI, the Indonesian consortium formed by Salim Group and Medco Group, proposed to give Hyflux a S$530 million lifeline in October 2018 but the agreement is now off, and a lawsuit and a countersuit have been filed by the parties.