Hyflux discloses identity of potential Middle East white knight

Utico is the largest private full service utility and developer in UAE.

Embattled water firm Hyflux has unveiled the identity of its potential white knight, Utico. The latter earlier submitted a non-binding letter of intent for a possible injection of $400m in funds which Hyflux intends to use for equity, working capital purposes and possible urgent interim funding. 

The Middle Eastern entity is the largest private full service utility and developer which "possesses a reputable track record in the water and power industries" and with shareholders and investors including sovereign institutions of the Oman, Saudi Arabia, Bahrain and Brunei governments, the firm said in an SGX filing.

"[Hyflux's] legal and financial advisors are currently engaged in active discussions with Utico’s legal and financial advisors on the terms of Utico’s investment, to be set out in a binding term sheet for execution," Hyflux added. 

Also read: Hyflux troubles trickle down as nearly $4b corporate bonds mature by end-2019

Utico intends to invest in Hyflux so that entities remain intact and operational and retain its current management. The potential UAE white knight also hopes to reach an "amicable deal" with creditors and investors.

The move comes after a restructuring agreement between Hyflux and would-be white knight SMI was scrapped in early April, which ended with Hyflux suing SMI and claiming a $38.9m deposit placed into escrow. SMI earlier pledged to invest $530m in exchange for a 60% stake in Hyflux in October 2018 but trouble began brewing in the partnership after SMI said that it could abandon the deal after the Public Utilities Board (PUB) issued a default notice for Tuaspring desalination plant.