Hyflux has received a formal expression of interest (EOI) from advisory The Spectrum Solutions Group (TSSG), representing US-based private equity player Strategic Growth Investments (SGI), the troubled water infrastructure company said Monday.
SGI’s EOI said it was prepared to invest S$204.78 million ($150.8 million) or more, as needed. The offer would include S$97 million for senior unsecured creditors, S$15.78 million for trade creditors, and S$32 million for the perpetual capital securities and preference shareholders (PnP), the EOI filed to SGX said.
In addition, SGI’s offer includes S$60 million for working capital and financing for future restructuring, the filing said.
SGI said it would offer up to 15 per cent of the equity in Hyflux as warrants, with 5 per cent going to the senior unsecured creditors and 10 per cent to the PnP holders.
Hyflux said it was considering the letter and would make an announcement when there were material developments.
The EOI said SGI has found financing from several family offices in the US and abroad, and from several large Asian institutional investors. It has no plans for debt financing, SGI said.
“[Hyflux] has a solid reputation as an industry veteran and a strong track record in delivering sizable projects globally,” the EOI said.
“SGI’s investment thesis is to build upon this base and transform the company into a cleantech EPC market leader by leveraging technical innovation and brand value, to capture market share and achieve profitable growth,” the EOI added.
Hyflux’s already turbulent straits worsened in late May when the company announced Utico’s S$400 million ($282.94 million) rescue deal had lapsed.
Hyflux said at the time that it remained in talks with Utico, the largest private full-service utility and developer in the Middle East; Utico’s offer has since been extended more than twice, with the current deadline set for mid-October.
Utico had revised its offer to change all-cash considerations into Hyflux and Utico equity, as well as changes to payments to creditors and advisors.
In lieu of the changes, Utico has offered to invest in Hyflux SPV in Oman and Algeria to rejuvenate the assets, with “time being of the essence.”
In a memo dated 4 June, which Hyflux filed to SGX, the water company said its medium-term noteholders planned to reject the revised offer because they wanted cash and not equity. The Securities Investors Association (SIAS) also continued to have concerns about the offer, Hyflux said.
Other stakeholders had not responded by the June 3 deadline, Hyflux said at the time.
In addition to continuing talks with Utico over the letter’s contents, Hyflux said in a previous announcement that it was also pursuing other options, including with Aqua Munda, Longview International and FCC Aqualia.
In March, Hyflux said FCC Aqualia, a Spain-based water-management company, sent a letter of interest for a potential transaction involving the company or its assets but did not provide further details.
Singapore-based holding company Longview, along with its unnamed Chinese joint venture partner, had expressed interest in investing in Hyflux in February.
In June, an Indonesian investor, Johnny Widjaja, expressed interest in investing up to S$300 million in Hyflux, and provided a letter from an Indonesian bank confirming he has the available funds. His vehicle, Pison Investments, has said it has received “significant” tender applications from Hyflux creditors accepting the bid.
In September, Aqua Munda, a Singapore-registered company that has offered to buy some of Hyflux’s noteholders and unsecured creditors’ debt, also sent a letter to the water company’s board saying it was “ready to provide no less than S$10 million of cash funding.” The funding would be a loan or on other terms to be mutually agreed, the letter, which was filed to SGX, said.
The expiration of the deal with Utico was another pothole in Hyflux’s long, rocky road towards finding a white knight investor.
The deeply indebted water player had filed for court protection from creditors in May 2018, after an oversupply of gas in Singapore resulted in depressed electricity prices, leading to losses for the company.
Hyflux’s unsecured debt load stands at nearly S$3 billion. Its rescue had seemed imminent after Hyflux reached deal with SM Investments, a consortium of the Salim Group and the Medco Group, in October 2018.
But in April 2019, Hyflux terminated the deal, saying it had “no confidence” SM Investments would complete the investment after it failed to provide a written commitment.
Late last year, Hyflux said it reached a deal with United Arab Emirates-based utility Utico FZC to provide the Singapore company with an investment of S$300 million and a S$100 million loan in exchange for an 88 per cent stake.
However, the scheme meetings – where Hyflux’s creditors vote on the proposed scheme of arrangement as contemplated under the Utico Restructuring Agreement – originally scheduled on 22 and 23 April 2020 had to be vacated due to regulations imposed in light of the COVID-19 pandemic.