Singapore’s Crisis-Hit Hyflux Reaches Restructuring Deal With Utico
Singapore’s Crisis-Hit Hyflux Reaches Restructuring Deal With Utico
(Bloomberg) -- Troubled Singapore water treatment firm Hyflux Ltd. has entered a restructuring deal with Middle Eastern utility Utico FZC.
Under the agreement, Hyflux will get investment totaling S$400 million ($293 million) from Utico, according to an exchange filing. The pact caps drawn out negotiations between the two companies.
Hyflux, Singapore’s highest profile debt restructuring, had been looking for a white knight investor after a deal with Indonesian consortium SM Investments fell through in April. Its catastrophic slump stunned 34,000 individual investors, and prompted a rare public protest in the country.
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.
‘Uneven Payout’
Under the proposed terms of the court-approved restructuring, S$250 million is to be paid to the unsecured debt holders. Perpetual and preference shareholders can opt for an upfront cash payment or payment in installments.
If they opt for an upfront payment, they get the lesser of S$1,500 and 50% of the value of perpetuals and preference shares, with the total amount capped at S$50 million.
If they opt for payment in installments, they receive what holders who opt for the upfront payment get, and also an additional cash payout. Assuming all holders opt for delayed payouts, they receive as much S$100 million.
The deal reduces uncertainty for those holders but there is an “uneven payout,” according to Andrew Wong, credit analyst at Oversea-Chinese Banking Corp.
“It’s positive for small retail holders and negative for holders of larger amounts of bonds or preference shares,” he said.
Utico plans to list on the Singapore Exchange within two years from the end of the restructuring process and will remain a separate company from Hyflux, Richard Menezes, chief executive officer of Utico, told reporters on a call. The plan is to have Hyflux’s stock trading suspension lifted in the first quarter of 2020, he added.
A court hearing for the debt-laden company is scheduled for Friday.
--With assistance from Ameya Karve, Abhishek Vishnoi and Joyce Koh.
To contact the reporter on this story: Denise Wee in Hong Kong at dwee10@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Ken McCallum
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