SINGAPORE: Water treatment firm Hyflux's application for an extended six-month moratorium has been given the green light by the High Court on Tuesday (Jun 19), as the company said it is in preliminary talks with more than 20 interested parties for rescue financing of up to S$200 million.
The company also remains in discussion with interested buyers for its Tuaspring Integrated Water and Power Project, its lawyers from WongPartnership said in court.
AdvertisementApart from seeking new sources of liquidity and continuing attempts to divest key assets, Hyflux is also looking at a consent solicitation exercise for holders of its notes and perpetual instruments.
For the consent solicitation exercise, it could include an extension of the maturity of the notes, as well as a deferment and reduction of the coupon payments on both the notes and perpetual securities.
It is also looking to partner the Securities Investors Association (Singapore) to hold townhall meetings on Jul 19 and 20. Investors will be grouped accordingly and given specific meeting timings.
These steps will help Hyflux to emerge with a “more manageable debt load”, said its lawyers as they laid out the case for the company to be granted a six-month reprieve. If the moratorium was not granted, the company could “run out of available cash in four to five weeks”, WongPartnership's Manoj Pillay Sandrasegara said.
AdvertisementAdvertisementThe arguments put forth include a longer time needed for the company to divest key assets such as Tuaspring, which should not be rushed into a sale.
A short runway and repeated applications for extensions will also create uncertainty and discourage third-party financiers from supporting the company, Hyflux's lawyers said.
They added that a six-month moratorium will give the company “a strong platform” to properly engage its diverse stakeholders, which include banks, trade creditors, as well as retail investors that number 34,000.
But it was not all without objections. Lawyers representing some of Hyflux’s biggest creditors argued that Hyflux should not be granted a longer moratorium of six months.
A lawyer from TSMP Law Corporation representing Mizuho Bank said a shorter moratorium of two to three months will be “reasonable” for Hyflux to engage in further discussions with various stakeholders. Mizuho is Hyflux’s second biggest creditor.
KFW IPEX-Bank also stated its case for a shorter moratorium, with a lawyer from Cavenagh Law noting that the bank might support an extension of the moratorium if it sees progress on the outcomes.
While granting the six-month moratorium, the court ordered Hyflux to provide an update of its reorganisation plans at the three-month mark, with a status conference to be held two weeks after that.
The court hearing comes after Hyflux and five of its subsidiaries on May 22 applied to the High Court to begin a reorganisation of its debt and businesses.
In a statement, it cited “prolonged weakness” in Singapore’s power market for its financial woes, which has led to “short-term liquidity constraints”.
The homegrown firm had described the move to seek court protection from creditors as necessary to “protect its operations while it seeks to reorganise its businesses and liabilities”.
However, this has caught many mom-and-pop investors off guard, with the company’s shares and related securities being halted from trading since May 21. The SGX-listed counter last changed hands at S$0.21 on May 18 before the trading halt. Year to date, it has fallen 45 per cent.
A handful of retail investors turned up at the court hearing on Tuesday. One of them is Mr Martin Lee who holds Hyflux’s preference shares, perpetual securities and ordinary shares.
“I’m here just to see how it goes and what’s the outcome of this,” he told Channel NewsAsia, noting that many investors like him have been surprised at the company’s financial situation.
Commenting on the townhall meeting that Hyflux is aiming to hold for investors, he said: “There’s a lot of uncertainty and we want answers.”
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