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Once Singapore's star company, Hyflux seeks court protection

Water company faced cash crunch after global expansion

Singaporean water treatment company Hyflux faces liquidation unless an extension to its debt moratorium is approved. (Photo by Keiichiro Asahara)

SINGAPORE -- Iconic water treatment business Hyflux has applied for Singaporean court protection to begin a debt and business restructuring designed to cope with the firm's cash constraints, the company said Tuesday night.

The city-state's Companies Act automatically grants Hyflux a 30-day moratorium during which the business receives protection from certain actions by creditors such as forfeiture. Hyflux seeks a six-month moratorium from the court.

"The company is taking this step in order to protect the value of its businesses while it reorganizes its liabilities," Hyflux said in a statement to the Singapore Exchange. Trading of Hyflux shares was halted Monday.

Hyflux does not intend to make a May 28 distribution payment on 500 million Singapore dollars ($373 million) in perpetual capital securities, under advice from financial adviser Ernst & Young Solutions and legal adviser WongPartnership. The securities carry a 6% coupon rate and have no maturity date.

The company blamed depressed electricity prices in Singapore. Hyflux's newest desalination plant in Singapore's northwestern area of Tuas contained power generation facilities, but the "prolonged weakness [in power prices] has led to increasing strain on the group's finances, resulting in short-term liquidity constraints in recent weeks," the company said in the statement.

Hyflux booked a net loss of S$116.4 million for the fiscal year ended in December. The company also reported a wider loss on the year for the January-March quarter, at S$22.2 million.

A desalination plant in Singapore and another in China have been up for sale for some time as Hyflux looks to recuperate losses, but no satisfactory offers have appeared.

CEO Olivia Lum, who founded Hyflux in 1989, was a star in Singaporean industry during the early 2000s, as she built the water-scarce country's first wastewater recycling plant and its first seawater desalination plant. The company contributed to Singapore's crucial efforts to improve self-sufficiency in water supplies.

The company enjoyed expansion to the Middle East, China and India to supply water plants, but the business environment turned bleak with the geopolitical uncertainty in the Middle East following the Arab Spring that began in 2010.

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