Mystery Firm Makes Surprise Bid for $1.3 Billion Hyflux Debt

(Bloomberg) -- The saga of Hyflux Ltd., Singapore’s highest-profile debt restructuring case, just took another twist.

A newly incorporated entity made an offer to buy debt of the water treatment company, which was a vaunted symbol of Singapore’s entrepreneurial might until its fall last year.

Little-known Aqua Munda Pte, which was just incorporated in Singapore on Tuesday, made the offer to buy S$1.8 billion ($1.3 billion) of debt from Hyflux noteholders and unsecured creditors, according to an exchange filing. The firm is backed by a well-funded investor group from the Gulf region, according to people familiar with the matter.

The surprise offer comes just weeks after crisis-hit Hyflux entered a restructuring pact with Middle Eastern utility Utico FZC.

“The timing and the manner in which Aqua has made its offer makes it a hostile and ambush investment,” Utico Chief Executive Officer Richard Menezes said in an interview. “They may try to make us renegotiate the entire deal. They may ask to value Hyflux higher and maybe even bring Olivia back.”

Public Protest

Founded by Olivia Lum and once heralded for its desalination technology in Singapore, a country that had long depended on importing water and harvesting rainwater, Hyflux’s expansion into the power-supply business led to ballooning debt that it couldn’t repay. That left some 34,000 retail investors in the lurch and prompted a rare public protest in Singapore. Hyflux had been searching for a white knight investor since a deal with Indonesian consortium SM Investments fell through in April.

Aqua Munda lists its principal activities as water treatment, waste treatment and oilfield chemicals, information from the Accounting and Corporate Regulatory Authority shows. Its authorized representative is Singapore citizen Bambang Sugeng Bin Kajairi.

The debt purchase offer includes contingent liabilities of about S$750 million. While it doesn’t include Hyflux’s perpetual and preference shareholders, if the offer is successful, the next step is likely to be a restructuring exercise that includes them, people familiar with the matter said.

“We think there is little credence to the offer to creditors at this stage,” given the investor can change or withdraw the invitation, according to the OCBC credit research team. Aqua Munda can also decide which tendered offer to accept “in contrast to a more equitable approach of pro-rata acceptance,” and the deadline is also tight, the team said.

Aqua Munda’s offer will open on Dec. 30 and expire on Jan. 10. A memorandum setting out the offer terms will be issued by Dec. 27.

A Singapore court in November approved Hyflux’s request seeking an extension of its debt moratorium by two months until Jan. 31, with the next hearing scheduled for Jan. 29.

©2019 Bloomberg L.P.

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