Hyflux ‘progressing’ towards $400m deal with Utico
Debt-ridden Hyflux and its potential white knight Utico are "progressing" towards a $400 million binding deal that requires the approval of senior creditors and some 34,000 junior creditors trying to recover $900 million they had invested in the water treatment firm.
The United Arab Emirates utility firm is looking to take an 88 per cent stake in Hyflux with an investment of $300 million as equity and a $100 million shareholder loan, they said in a joint update filed with the Singapore Exchange yesterday. But both are still working towards a binding agreement subject to approvals from all stakeholders and definitive documents being finalised and entered into.
Utico also 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 retail perpetual securities and preference (PNP) shareholders. Details of Utico's offer to PNP shareholders will be released prior to a townhall.
Utico chief executive Richard Menezes told The Straits Times yesterday that the approval of senior creditors and Hyflux's retail PNP shareholders will be sought "through meetings and votes". This even as a Hyflux adviser had earlier said that the junior creditors' votes are not needed for Utico's offer to be accepted.
Asked why Utico is offering to help the junior creditors, Mr Menezes said: "We are white knight investors. Water and utilities are based on public necessity and should be based on ethics too... "
In May, Mr Menezes had said that small investors of up to $2,000 to $3,000 could get 50 per cent cash redemption along with full redemption opportunity, while the rest of Hyflux's investors could get a similar but staggered and cascade deal.
Mr Menezes said the key issue is "shortage of time and business value deterioration. Hence stakeholder approvals is the key aspect".
Both Utico and Hyflux say they intend to enter "definitive documentation in respect of the proposed investment" as soon as possible, and to hold townhall meetings for the PNP investors and the holders of medium-term notes, "ideally before the next court hearing" on Aug 2, when the court-approved debt moratorium ends.