High Court grants Hyflux 6-month lifeline to stave off creditors
Water project firm is seeking to raise about $200 million in rescue financing
The High Court has granted Hyflux a six-month lifeline to stave off creditors.
Now the struggling water project firm must find a buyer for its stake in the giant Tuaspring asset and seek offers from rescue financiers.
Hyflux is seeking to raise about $200 million in rescue financing after the court yesterday granted it a six-month reprieve from creditors to work out a survival plan and reorganise its debts.
Without the debt moratorium, Hyflux would "run out of cash in the next four to five weeks", Wong Partnership partner Manoj Sandrasegara told the court.
Hyflux's bank debt is $1.84 billion. That excludes $265 million in outstanding medium-term notes, $400 million in outstanding retail perpetual preference shares and $500 million retail perpetual securities.
Hyflux and its units under the moratorium had a cash balance of just $18.6 million as at June 4. That represents a net cash outflow of $300,000 since May 18.
Hyflux founder Olivia Lum did not attend yesterday's hearing but wrote in a June 14 affidavit that if the firm can get a $200 million cash injection, it would help fund construction at Hyflux's ongoing TuasOne and Qurayyat projects. It would also assist in securing new projects.
Hyflux is in preliminary talks with about 27 potential financiers. If these express interest after having seen limited data, they will proceed to more advanced talks, said Ms Lum.
Hyflux estimates that it will cost $132 million to complete the TuasOne waste-to-energy plant in May 2019. It will then enjoy a net cash inflow of $291 million.
The Qurayyat desalination project in Oman is expected to cost US$28 million (S$38 million) to complete. Hyflux will get a net cash inflow of US$5.6 million once commercial operations commence in September.
The six-month lifeline gives Hyflux's interested rescuers the time to arrange a $200 million syndicated loan, Mr Sandrasegara said.
Another priority for Hyflux is the sale of the Tuaspring Integrated Water and Power Project - its largest but loss-making asset, to be returned to national water agency PUB in 2038.
Hyflux is in talks with four parties on a possible sale, Ms Lum wrote, noting that it could "be divested at a price around or above its present $1.3 billion book value".
If Tuaspring is sold at book value or higher, Hyflux would have about $900 million left after paying off secured project finance lender Maybank, Hyflux's largest secured creditor, wrote Ms Lum.
The moratorium granted yesterday did not extend to Tuaspring. The Court will hear Tuaspring's application for a separate moratorium in two weeks.
Hyflux has 29 bank lenders. Among the six banks that did support Hyflux's moratorium were Mizuho, which is owed $235.2 million, and DBS, owed $93.6 million.
Ms Lum held that if Hyflux is liquidated, unsecured creditors are likely to suffer a 72 to 85 per cent loss of face value.
Hyflux and the Securities Investors Association (Singapore) will conduct town hall meetings for investors on July 19 and 20. The court told Hyflux to provide an update in three months. - THE STRAITS TIMES
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