Crisis-Hit Hyflux’s Debt Plan Faces S$40 Million Fee Hurdle

Crisis-Hit Hyflux’s Debt Plan Faces a S$40 Million Fee Obstacle

29 Nov 2019, 08:35 PM IST

(Bloomberg) -- Having just signed a deal with Middle Eastern suitor Utico FZC, crisis-hit Hyflux Ltd. is facing a fresh challenge -- how to allocate S$40 million ($29 million) of fees among restructuring advisers.

The Singapore water treatment company needs to get its advisers to agree on how to split the pot, or Utico has the right to walk away, according to the deal terms. The problem was discussed in a court hearing in Singapore on Friday.

Lawyers and consultants have been working for more than 1 1/2 years on Hyflux, the nation’s most high-profile debt restructuring. An expansion into the power-supply business went awry, leaving the company with billions of dollars in liabilities -- including to some 34,000 retail bondholders -- that it couldn’t repay.

The restructuring process has “taken a while” and it would be a shame if all were to “come to naught,” said Judge Aedit Abdullah at the Friday hearing.

Hyflux’s advisers include WongPartnership LLP, Ernst & Young Solutions LLP and nTan Corporate Advisory, according to filings. The creditors’ advisers include Borrelli Walsh, Hogan Lovells Lee & Lee, Akin Gump Strauss Hauer & Feld LLP and BlackOak LLC.

Fees should not be a stumbling block for completing the deal, Manoj Sandrasegara, partner at WongPartnership, said at the hearing.

Under the agreement, Utico will take up new Hyflux shares for S$300 million accounting for a 95% stake in the company. It will also give Hyflux a working capital line of up to S$100 million. As much as S$50 million of that capital line will be used to pay perpetual and preference share holders.