SINGAPORE -- Water treatment company Hyflux was granted another extension to its debt moratorium on May 29, but its path forward remains unclear without a deal to secure a sponsor for a turnaround.
The Singaporean company had requested an extra four months beyond the May 29 deadline to find a way to repay 2.8 billion Singaporean dollars ($2.03 billion) in debt. It said in court that it expects to sign a deal with one of several possible sponsors by the end of June but will need until September to complete the process, including creditor approval.
In response, the Singaporean High Court extended the debt reprieve to Aug. 2. Justice Aedit Abdullah said he would be amenable to another two-month extension if negotiations with investors were going well at that time.
Since its founding in 1989 by Olivia Lum, Hyflux had grown rapidly in water-poor markets like Singapore and the Middle East. But its cash flow dropped after a failed entry into the power generation business in 2016. The company filed for a debt reprieve in June 2018.
The company was close to receiving a capital injection from a consortium led by Indonesia's Salim Group, but the deal fell through in April, and Hyflux has since had to create a turnaround plan from scratch.
Utico, a utility based in the United Arab Emirates, is now considered the most likely candidate to bail out Hyflux. Negotiations began around April for a S$400 million investment, but the two companies have yet to reach an agreement.
Hyflux said it is also in talks with Mauritius-based investment fund Oyster Bay Fund and one of the world's 10 largest desalination companies. It announced that another five players are considering investing or buying assets from the company in a likely attempt to appease creditors.
Seven creditors including Japan's Mizuho Bank and Germany's KfW IPEX-Bank took legal action in late April in an attempt to speed up the debt restructuring process, which has now been going on for about a year. Though the court rejected their demand, analysts say this may be the last chance for Hyflux to turn itself around.