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Court grants 'last' adjournment for JM application for Hyflux

Court grants 'last' adjournment for JM application for Hyflux

Source: Business Times
Article Date: 15 Oct 2020
Author: Lee Meixian

It's a last chance for Hyflux to bring a firmer conclusion to one of the current three deals on the table, as Justice Aedit Abdullah on Wednesday agreed to grant adjournment to the judicial management (JM) application.

It's a last chance for Hyflux to bring a firmer conclusion to one of the current three deals on the table, as Justice Aedit Abdullah on Wednesday agreed to grant adjournment to the judicial management (JM) application. A hearing will be conducted "no earlier than three weeks" from now, the judge said.

But this was after he chastised Hyflux's lawyer Nish Shetty from Clifford Chance Asia for making a last minute request at the start of Wednesday's hearing for an adjournment.

Justice Abdullah described Mr Shetty's actions as "taking the court for granted" and said that "hairdressers and dentists do seem to get more notice than me about cancellations".

From a virtual court hearing on Zoom, he ordered Mr Shetty and Tan Kok Quan Partnership lawyer Eddee Ng, who represents the unsecured working group (UWG) of creditors, to meet him physically in court.

There, Mr Shetty explained that it was because of the various new developments that came up in the last 48 hours – including a new expression of interest (EOI) from American fund manager Strategic Growth Investments (SGI) on Monday – that led to his request.

But remarking on the repeated requests for extensions to Hyflux's debt moratorium without better progress shown in closing a restructuring deal, Justice Abdullah said: "Suspicion is building up considerably whether there is some sort of gamesmanship going on here."

This echoed Mr Ng's views. He too argued in court that his clients – Mizuho, Bangkok Bank, BNP Paribas, CTBC Bank, KfW, Korea Development Bank, and Standard Chartered Bank – were against the adjournment.

He referred to numbers detailed in its affidavit that showed how "powerless" a state Hyflux is in. "There is no more time," he said. "They (Hyflux) are diminishing the chances of a successful JM... This is nothing more than a cynical attempt to reduce the ability of any JM to be able to do his work."

The UWG holds 55.56 per cent of the senior unsecured debt of Hyflux and 57 per cent of the senior unsecured debt of Hydrochem.

To this, Mr Shetty replied that a JM would take into account the interests of all the stakeholders, not merely the UWG's, and Pison's offer should be given a chance. "As at January this year, (a liquidation analysis by EY was) looking at a liquidation value of between two and six cents, so if the deal were to be done, even the UWG would be better off."

There are currently three offers on the table. The latest from SGI will see the fund manager invest at least S$204.8 million, if it progresses.

Senior unsecured creditors will get the lion's share of S$97 million, trade creditors S$15.8 million and the perpetual securities and preference shares investors S$32 million – all on a pro-rata basis.

The other two offers are from Middle Eastern utility firm Utico, and Pison, the investment vehicle of Indonesian magnate Johnny Widjaja.

The latest update from Pison as at Sept 25 was that it has received 164 tender application forms in its proposed debt purchase programme, and it has accepted about 140 of them, and is "in the process of finalising several more".

Round the table, no other creditors had objection to an adjournment, although a few hoped for a shorter extension as Hyflux's restructuring process has already dragged on for more than two years.

The MTN holders' lawyer wanted more clarity on what Pison's deal offers to subordinated creditors and how professional adviser fees will be resolved.

The lawyer for Securities Investors Association (Singapore) also hoped that the adjournment would enable the EOI from SGI, which was introduced by Sias to Hyflux, to be developed into a "comprehensive" restructuring plan. Sias did not support a JM at this juncture as this may impede discussions with SGI.

A date for the next hearing will be arranged by the registry and conveyed to the lawyers.

Meanwhile, Hyflux's debt moratorium was similarly extended until the next hearing date.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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