SINGAPORE -- Struggling Singapore water supplier Hyflux has secured a capital injection from Indonesian conglomerates Salim Group and Medco Group, which said they will provide 530 million Singapore dollars ($384 million) to the debt-laden company.

The deal comes as Hyflux -- a local startup that has grown to provide 30% of Singapore's daily water needs, reducing reliance on Malaysia -- is nearing the end of a six-month reprieve from creditors during which it has tried to cut roughly SG$3 billion in debt.

Under an agreement signed on Oct. 18, SM Investments, a 60-40 joint venture between Salim and Medco, would own 60% of Hyflux after a new share offering. 

Of the SG$530 million injection, SG$400 million would go toward the stock purchase, while the remainder would consist of loans. The transaction still requires approval from shareholders, creditors and regulators.

Olivia Lum, the founder, chairman and CEO of Hyflux, said at a news conference that the Indonesian proposal was the "best" offer among many the company had received, because it would provide not only a lifeline but also an opportunity to restore growth.

The deal with the Indonesian investors, if it goes through, would eliminate the need to sell off the money-losing Tuaspring water works and power plant because "Salim and Medco want Tuaspring" to stay within the company, according to a source.

As a part of its restructuring, Hyflux had been looking for a buyer for Tuaspring, which has a book value of SG$1.4 billion, but no satisfactory offers were received. A bid, reportedly from Singaporean state-linked conglomerate Sembcorp, was not enough to reduce Hyflux's debt.

The new partners expect synergies from their tie-up.

Salim Group, one of the largest conglomerates in Asia, has both power and water businesses in Indonesia and the Philippines. Medco Group, known for the listed Medco Energi Internasional, has various power-related businesses in Indonesia.

Hyflux chairman Olivia Lum, center, with new investors Anthony Salim, chairman of the Salim Group, front right, and Arifin Panigoro, the founder of Medco Group, front left, expect synergies in power and water businesses. (Photo by Mayuko Tani)

Lum told reporters that Indonesia could become "another big market for us."

Hyflux, whose desalination and wastewater recycling operations offset part of Singapore's need to buy water from Malaysia, shocked investors in May when it said it would seek court protection to reduce its debt pile.

The company suffered a cash crunch owing to losses at Tuaspring. Singapore's high court gave a six-month debt moratorium until Dec. 19.

Trading in the company's Singapore-listed shares has been suspended since May, but Lum said the intention is to keep the company listed while restructuring with its new partners.

"Today is a happy day," Lum repeatedly said at the news conference.

The agreement alone does not guarantee the deal will go through. Creditors, shareholders and regulators still need to approve the transaction, which Lum hopes to complete in two to three months. Approval must come before the moratorium period ends on Dec. 19 in order for Hyflux to apply for an extension, a source with knowledge of the matter said.

Neither Lum nor the new investors said how the capital injection would affect the restructuring or the possibility of debt write-downs.