The Singapore High Court has extended beleaguered water treatment firm and genco Hyflux’s debt moratorium until the end of next month on 24 May as the company seeks to secure a new white knight investor in a race against the prospect of liquidation.
The extension was granted upon Hyflux merely days before the original expiry date of Hyflux’s court protection from its creditors next Tue (30 Apr).
Justice Aedit Abdullah, however, had rejected Hyflux’s request for a three-month extension during a hearing on Thu (25 Apr), saying that a debt moratorium under Section 211B of the Companies Act is “not meant to continue indefinitely” but meant to “give the company breathing space”, The Business Times reported.
However, CNA reported that a further extension of the debt moratorium can be argued for on either 7 May or 13 May.
In the meantime, Hyflux has signed a non-binding letter of intent (LOI) with a Middle East owner and developer of water and power utilities, BT observed, following the termination of the S$530 mil bailout agreement with SM Investments, the Singapore arm of Indonesian conglomerate Salim-Medco Group earlier this month.
“Discussions with this party are based on a possible injection of S$400 million to be used for equity and working capital purposes and possible urgent interim funding,” said Hyflux at a filing to the Singapore Exchange (SGX) on Thu (25 Apr).
CNA reported that at the SGX filing, a group of unsecured creditors comprising Mizuho Bank, KfW IPEX-Bank, Bangkok Bank, BNP Paribas, CTBC Bank, and the Korea Development Bank have applied to the High Court on Wed for Hyflux and Hydrochem to be placed under judicial management (JM).
The banks’ application will be heard on 7 May, and should the application be approved by the court, a JM hearing will be held on 13 May, according to CNA.
Hyflux’s lawyer Manoj Sandrasegara argued during the High Court hearing on Thu that “the JM application is just disguised to be a liquidation application, as most JM cases end up as”, BT reported.
Meanwhile, Malayan Banking Bhd, or Maybank, has terminated its agreement with Hyflux and its desalination plant Tuaspring as the firm’s largest secured creditor.
The Straits Times reported Hyflux as saying on Thu that Tuaspring had received a letter of demand from Maybank, dated 23 Apr, over payments “immediately due and payable”, comprising “S$509.1 million drawn down under term loan facilities, a US$44.5 million cash cover for contingent liabilities, along with further interest and legal costs on a full indemnity basis”.
Additionally, Hyflux is required to pay a sum of approximately S$28.0 million to Maybank from “hedging agreements”.
“The demand from Maybank, like the termination of the collaboration agreement, is expected to have a material impact on the financial performance of the group,” said Hyflux.
ST noted that Maybank has instructed Tuaspring against selling, removing, transferring, or disposing its property “charged to a debenture, as the floating charge over said property has crystallised”.
However, the notice excludes the Public Utilities Board’s takeover of the Tuaspring plant.