Singapore’s Hyflux Supports U.S. Firm’s Restructuring Proposal

Hyflux Ltd., in its third year of a debt-restructuring process, supports a plan proposed by Strategic Growth Investments LLC to acquire and privatize the Singapore-based water-treatment company in a transaction including a cash injection of S$208 million ($154 million).

The firm will work with SGI to “facilitate the adoption and implementation of this proposal by the various stakeholders on a timely basis,” Lau Wing Tat, a Hyflux director, said in afiling to the Singapore exchange Friday.

A deal could help bring to an end the city-state’s most high-profile debt-restructuring case, which started in May 2018. Hyflux owes more than S$2 billion, including bank loans and bonds held by 34,000 retail investors. Despite being approached by multiplesuitors, the company has failed to reach an agreement and has sought several extensions on its debt moratorium.

Hyflux is facing claims totalling S$2.2 billion, about half of which is from holders of its perpetual capital securities and preference shares, the SGI term sheet shows. Banks are owed S$630.7 million, according to the document.

Under the proposal, SGI would pay S$155 million to certain creditors, put S$53 million aside to be placed under Hyflux’s control for “contingent claimants” and provide S$60 million for working capital, it says. The deal also includes newly issued equity and convertible securities.

The term sheet is valid for 60 days upon which time a binding letter of intent shall be issued and signed by all related parties.

SGI aims to close the deal within 60 days of the execution of the letter of intent, it said.

Read more:
Singapore Court Warns Hyflux of Delaying Restructure Process (1)
Hyflux Says 100 Creditors Oppose Judicial Management Order
Rags-to-Riches Tale Goes Sour for Hyflux Founder Olivia Lum

SGI will terminate the deal should Hyflux go into judicial management, mainly because that would likely result in a prolonged process,Michael Hong, chief investment officer of the U.S. firm, said in a letter to Hyflux Chief Executive Officer Olivia Lum, also filed to the exchange on Friday.

The process is a form of debt restructuring in which an independent manager is appointed to supervise the affairs, business and property of a company under financial distress.

Singapore’s High Court on Oct. 15warned Hyflux about dragging out its restructuring process and said there would be no further adjournments on a hearing to decide whether it should be put under judicial control. Next hearing is Nov. 16.

Founded by 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 about 34,000 retail investors in the lurch and prompted a rare public protest in Singapore.

— With assistance by Ameya Karve

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