Utico lobbies to pay Hyflux creditors with equity

The initial cash offer did not gain support from creditors.

Utico is proposing to pay the creditors of embattled water treatment firm Hyflux and advisors with equity shares in place of cash, according to a letter filed in SGX.

This follows after the initial restructuring agreement failed to gain approval from Hyflux board, the unsecured working group (UWG) and advisors, as well as explicit support from Securities Investors Association Singapore (SIAS).

Under the latest proposed terms, senior unsecured creditors will receive 17% of Utico and 12.5% of Hyflux, whilst P&P holders will get 5% of Utico and 12.5% of Hyflux. Advisors will get 5% of Hyflux as payment.

The white knight proposed for the offer to be approved by the Hyflux board, major shareholder Olivia Lum, and senior unsecured creditors by 4 June. Further, it required for no additional cost buildup or "undue further loss of time," immediate approval for Hyflux to continue business and work with Utico on all projects, and no further extension of moratorium.

The proposal is also contingent on the approval to transfer all project agreements and shareholding of Hyflux project companies in Algeria and Oman to Utico. The investor expressed plans to invest at Hyflux SPV in Oman and Algeria to rejuvenate the assets.

"Once the deal is accepted by HLL and approved by creditors, scheme passed with all regulatory and other approvals and consummated, Utico at its sole discretion will engage with senior unsecured creditors, P&P and advisor parties for a buyback of its shares on an exclusive basis,” said Utico managing director and EVZ Richard Menezes.