SINGAPORE -- Hyflux said Thursday that it is nearing a bailout deal with United Arab Emirates’ utility provider Utico, where the Middle Eastern company will inject a total of 400 million Singapore dollars ($294 million) to acquire an 88% stake in the embattled water treatment company.
The deal, if finalized, will pave the way for the one high-flying Singapore company to restructure its business. It remains unknown how the company's long-suffering retail investors will fare under the terms of the bailout deal.
In a joint statement released Thursday, the two companies said they “are now progressing towards a deal subject to approvals from all stakeholders and definitive documents being finalized and entered into.”
SG$300 million of the total capital injection will be used for equity acquisition, while SG$100 million will be for a shareholder loan, according to the statement. “This is subject to discussions being completed with the relevant stakeholders and definitive documents being executed expeditiously,” the joint-statement added.
The two companies said that Utico intends to offer Hyflux’s retail investors the cash equivalent of a 4% stake in the Utico group, plus additional cash to the thousands of Singapore citizens who invested their savings in the homegrown company.
Founded in 1989, Hyflux's water treatment and desalination technologies are considered essential if Singapore is to achieve water self-sufficiency. The company has also expanded outside the city-state, including the Middle East. But the company collapsed after relying heavily on borrowing for growth, and the failure of a foray into power generation in 2016. Hyflux filed for a debt reprieve in June 2018.
Earlier this year Hyflux almost secured a rescue deal with a consortium led by Indonesian conglomerate Salim Group, but the deal collapsed in April, and Hyflux started negotiations with potential alternative sponsors including Utico.
According to Utico’s website, the company is the largest private utility provider in UAE and provides services such as water purification and water recycling.
In May, Singapore’s High Court granted Hyflux an extension on its SG$2.8 billion debt moratorium to August 2, by which Hylux must agree with existing retail and institutional investors on a new debt restructuring plan that would be laid out after the Utico deal was finalized.
Trading of Hyflux’s shares at Singapore Exchange have been halted since May 2018.