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Hyflux pressured to conclude rescue deal by September

Singapore court says any further moratorium extension 'difficult' without agreement

SINGAPORE -- Embattled Singapore water company Hyflux has come under increased pressure to conclude a deal with a potential restructuring sponsor by the end of September, after five extensions since last year on its debt moratorium.

On Friday, the Singapore High Court granted a two-month extension on Hyflux's debt moratorium until September 30, giving the company more time to conclude a proposed rescue deal with United Arab Emirates-based Utico.

Granting the extension, Justice Aedit Abdullah said that any further extension would be "difficult" if no agreement has been reached within two months.

Hyflux is currently in talks with the Middle Eastern water company, which has said it will inject a total of 400 million Singapore dollars ($290 million) to restructure Hyflux.

Utico also 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.

After Hyflux filed for a debt reprieve last June, the debt moratorium has been extended five times, including Friday's decision, allowing the company to hold talks with potential investors.

This time, Hyflux had applied for a four-month extension, with the court halving this and demanding that the company deliver something "concrete" within the two months.

Utico's managing director Richard Menezes, who was present at the court as an observer, told reporters that the company was "millimeters away" from the deal and wanted to conclude it in two weeks, adding that Hyflux needed an immediate capital injection to avoid further damage to its corporate value.

According to Hyflux's statement of comprehensive income, filed to the court on Wednesday, the company's loss for June was SG$7.7 million, having widened from a SG$1.5 million loss in May.

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 in the Middle East. But it has relied heavily on borrowing and made big losses after a foray into power generation in 2016.

Last October Hyflux reached a rescue deal with a consortium led by Indonesian conglomerate Salim Group, but the deal collapsed in April, after which Hyflux started negotiations with potential alternative sponsors including Utico.

Trading of Hyflux's shares on Singapore's stock exchange have been halted since May 2018.

Nikkei staff writer Mayuko Tani in Singapore contributed to this report.

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