Unfortunately, liquidation means that the company&rsquo s 34,000 retail investors, to whom it owes $900 million, will most likely get nothing from the disposal of Hyflux&rsquo s assets.

 

THE Singapore High Court on Wednesday granted an order to wind up beleaguered water-treatment company Hyflux, while former white-knight suitor Utico was ordered to pay S$5,000 to the judicial managers (JMs).

 

The firm' s JMs - Patrick Bance and Hamish Alexander Christie of Borrelli Walsh (BW) - were appointed as Hyflux' s liquidators. Following that, the JM order was discharged.

 

This follows a hearing via Zoom before High Court Justice Aedit Abdullah, on an application filed last month by Hyflux' s JMs from BW (a restructuring, insolvency and forensic-accounting services firm) after restructuring negotiations with potential investors had fallen through. Hyflux' s winding-up hearing, initially set for July 12, was adjourned after Utico made a last-ditch attempt to intervene with the liquidation process. 

 

The court heard that the Securities Investors Association (Singapore), also known as Sias, was supportive of Utico' s attempt to present a viable restructuring proposal. However, Utico was unable to meet the minimum conditions.

 

In a letter to the Middle Eastern utility firm dated July 15, Sias president and chief executive officer David Gerald said it would require concrete milestones and a credible restructuring proposal from Utico for Sias to canvass support to extend Hyflux' s judicial management order from the retail holders of its preference shares and perpetual securities (PnP).

 

Sias had requested Utico to place a non-refundable deposit of S$10 million in Utico' s solicitor' s account or an escrow account by 10am on July 21 to confirm its plans to restructure Hyflux. This deposit was to be released to Hyflux for working-capital purposes upon a court grant to extend the judicial management.

 

The court also heard that Sias had offered to help Utico reach out to PnP holders who may be interested in selling some of their holdings, but Utico turned down the offer, saying that it did not want to " bypass or discredit the other investors whose debt Utico did not buy" .

 

Hyflux' s JMs, represented by lawyers from Fullerton Law Chambers with help from Senior Counsel Kenneth Tan, had asked for Utico to pay the JMs S$6,000 for the time that had to be spent on submissions following Utico' s intervention on July 12.

 

Taking into consideration the complexity of what was required, Justice Aedit ordered Utico to pay a cost of S$5,000 to the JMs.

 

Hyflux was founded in 1989 by Olivia Lum and known for its water-treatment and desalination technologies. The firm started feeling ripples of troubles between 2014 and 2016, following its foray into the energy business through the Tuaspring desalination plant. 

 

The plant chalked up losses amid low electricity prices and a challenging macro environment, while Hyflux continued to borrow heavily from investors through the issuance of perpetual securities. 

 

In the face of mounting debt, the group in May 2018 applied to the Singapore High Court to commence a court-supervised debt restructuring. Hyflux was subsequently put under judicial management after repeated extensions of the debt moratorium. 

 

On June 4, BW said negotiations with the investor for an investment in the entire Hyflux Group were unsuccessful, and that &ldquo a restructuring is not possible&rdquo . They added that &ldquo the continuation of the judicial management of the company is no longer necessary&rdquo and that the remaining value of Hyflux would be &ldquo best realised in a liquidation&rdquo .

 

THE Securities Investors Association (Singapore), or Sias, has requested white knight suitor Utico to place a non-refundable deposit of S$10 million in Utico' s solicitor' s account or an escrow account by 10am on July 21, 2021, to confirm its plans to restructure Hyflux.

 

In a letter dated July 15 to the Middle Eastern utility firm, Sias president and chief executive officer David Gerald said it would require concrete milestones and a credible restructuring proposal from Utico.

 

This is so Sias can canvass support to extend Hyflux' s judicial management order from the retail holders of its preference shares and perpetual securities (PnP), before the next hearing for the troubled water treatment firm on July 21, 2021.

 

Sias has requested that the utility company give an undertaking, by the same date, that the deposit will be released to Hyflux immediately upon a court grant to extend the judicial management.

 

Utico may place its own restrictions on the use of the deposit, such as permitting it to be used for Hyflux' s working capital requirements pending the completion of Utico' s restructuring proposal, or not allowing the deposit to be used to pay down fees of advisers or the judicial managers and their lawyers, Mr Gerald said.

 

Sias further requested that Utico give an undertaking, by July 31, to provide a term sheet for its proposed restructuring proposal, which should contain terms not less favourable than its offer to Hyflux in its draft affidavit in June 2021.

 

The term sheet should also contain details on when Hyflux' s creditors may receive payment under the restructuring proposal and whether such payment is in the form of cash or other consideration, Sias added.

 

Sias said that while it appreciates that Utico is the only remaining investor with an offer to the PnP Holders, it noted that the negotiations have been a " long-drawn-out affair which has consumed substantial time and effort of all stakeholders for more than 1.5 years with no result to show" .

 

Sias also said it is prepared to put Utico in touch with some PnP holders who may be interested in selling some of their holdings to Utico, as the utility company may not be able to intervene in the judicial management of Hyflux as a potential investor.

 

Sias added it would require a response from Utico by July 16.

 

Hyflux' s winding-up hearing, initially set on Monday, was adjourned after Utico made a last-ditch attempt to intervene. High Court Justice Aedit Abdullah had granted permission to circulate among creditors Utico' s draft affidavit, which was said to refute what the judicial managers had asserted regarding the failure to proceed with certain negotiations for the restructuring.

WHITE knight suitor Utico is making another last-ditch attempt to intervene in Hyflux' s winding up process.

 

The Middle Eastern utility firm was looking to file an affidavit, which refutes what judicial managers (JMs) have asserted regarding the failure to proceed with certain negotiations for the restructuring of Hyflux, the Singapore High Court heard on Monday.

 

This follows a hearing before High Court Justice Aedit Abdullah on the winding up application filed last month by Hyflux' s JMs from Borrelli Walsh after restructuring negotiations with potential investors had fallen through.

 

Justice Aedit had granted permission for Utico' s draft affidavit to be circulated among creditors within the day. The winding up hearing was adjourned, and a new date will be fixed in a pre-trial conference on Tuesday.

 

But Justice Aedit pointed out that commercial judgements are generally left to the JMs, and Utico currently does not have a standing as a shareholder nor as a creditor.

 

The court heard that it is in the " creditors' general interest" that Utico' s affidavit is heard, and there is evidence that could impact whether Hyflux should wind up without further exploring options with Utico, which is represented by lawyers from Braddell Brothers.

 

Hyflux' s JMs, represented by lawyers from Fullerton Law Chambers with help from Senior Counsel Kenneth Tan, countered these statements, saying that the deal with Utico was never pursued because there was insufficient evidence that they were able to bring the deal to fruition.

 

Furthermore, Hyflux had been seeking investors even before it came under judicial management and Utico was involved between April 2019 to November 2020, giving it ample time to obtain support from creditors.

 

Following a surprise bid by Utico CEO Richard Menezes two days afer a winding up application was filed in June, the JMs had stated that Utico remained unable to meet the minimum conditions required to consider an offer, just as it was before their previous discussions were terminated.

 

" We are looking at an investor who is at this stage trying to upend the whole process after there have been extensive negotiations and even a conditional sale agreement signed with other bidders" , said Mr Tan.

 

Keppel Infrastructure Trust (KIT) had entered into a conditional agreement to acquire the remaining 30 per cent stake it does not already own in SingSpring Desalination Plant from Hyflux for S$12 million, KIT' s trustee-manager announced earlier this month. 

 

The court also heard that Utico is willing to put up a S$10 million non-refundable deposit but on the condition that it is given a period of 60 days to negotiate with the JMs on restructuring.

 

This was, however, dismissed by Judge Aedit as he was not assured by what was offered by Utico. He said that he was willing to consider adjournment on those grounds if Utico had been able to put down money immediately for Hyflux' s operations.