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SIAS concerned over lack of finality on Utico's offer

SIAS concerned over lack of finality on Utico's offer

Source: Business Times
Article Date: 21 Nov 2019
Author: Ng Ren Jye and Lee Meixian

Hyflux says deal is still on and both sides continue to negotiate and hope to sign a definitive agreement soon.

Securities Investors Association of Singapore (SIAS) founder and CEO David Gerald on Wednesday said SIAS is "seriously concerned that there is no finality yet on Utico's offer" for Hyflux.

In a letter to the media, he highlighted that while Hyflux and the various creditor groups have been working within the timelines set by the Singapore High Court to finalise a deal, "changes have been repeatedly introduced at the eleventh hour by the investor".

"SIAS hopes that such strategies designed to achieve advantages for one party only would not be allowed to scuttle an outcome which could potentially benefit a great number of stakeholders, including the holders of the perpetual securities and preference shares," said Mr Gerald.

SIAS thus "urged all parties, including Utico, to continue negotiations with a view to achieve a commercially acceptable outcome for all stakeholders involved, including in particular, the holders of the perpetual securities and preference shares".

When contacted, a spokespersonfor the embattled water treatment firm Hyflux said it was unable to comment on the details of the negotiations while the talks are ongoing.

"But we can confirm that the deal is still on and Utico and Hyflux continue to negotiate with a view to signing a definitive restructuring agreement as soon as possible. The company will make an announcement with all relevant details of any agreement that is entered into with Utico."

The original proposed rescue package with Utico involves the Middle Eastern utility firm taking an 88 per cent stake in Hyflux through a S$300 million equity injection for senior unsecured creditors, as well as a S$100 million shareholder loan.

On Oct 31 this year, Utico through its financial advisers issued a 48-hour ultimatum for Hyflux to agree to its version of the restructuring agreement, or it will pull out. No updates were made after that.

A week before that, Utico had also threatened to shrink its proposed S$300 million equity injection to S$200 million if Hyflux had not signed a restructuring deal by the following week,on the premise that prolonged negotiations could have an adverse impact on the bottom lines of both companies, and other parties were also eyeing Hyflux's assets. Again, there were no further updates.

BT understands that Hyflux's negotiations with other investors besides Utico are still ongoing at the same time. Hyflux's lawyer had said in late October that the company was in talks with two other parties about potential investments as well.

On Tuesday night, Hyflux said in a statement that it was required to hold its FY2018 annual general meeting (AGM) by Dec 31 this year and file its 2018 annual return by Jan 31 next year, after the Accounting and Corporate Regulatory Authority (Acra) granted it a two-month extension.

This was three months fewer than what Hyflux had requested.

Hyflux also asked to extend its FY2019 AGM deadline to June 30 next year and to file its annual return for FY2019 with Acra by end-July 2020. Acra rejected these extension requests.

Separately, the Singapore Exchange (SGX) has granted Hyflux further extensions to release its 2018 and 2019 financial results and hold both fiscal years' AGMs.

Hyflux got a further four-month extension from SGX to release its unaudited FY2018 results and hold its FY2018 AGM by March 31 next year. However, Hyflux must comply with Acra's earlier deadline of end-December 2019 to hold its FY2018 AGM.

It also obtained four-month extensions from SGX to release its Q1, Q2 and Q3 FY2019 results by March 31, 2020, and a two-month extension to release its unaudited FY2019 results by April 30, 2020. Additionally, it got a two-month extension to hold its FY2019 AGM by June 30, 2020.

Hyflux announced in September that it had managed to get its moratorium extended to Dec 2, 2019. During this time, the group continues to reorganise its liabilities and businesses to reach a deal for its debtholders.

Hyflux said that it has been prolonging its timeline for the finalisation of the group's financial statements because any certainty in completing the company's reorganisation affects its preparation of financial statements on a going concern basis.

"Until a binding investment agreement is executed with a potential investor and the requisite meetings and due process take place, the release of financial results prior to in-principle agreement of the main terms of the reorganisation may potentially result in inaccurate and incomplete reflection of financial information," it said.

Hyflux's shares have been suspended since May last year after the company faced difficulties in meeting its financial obligations.

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

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