Hyflux ‘progressing' towards binding $400m deal with Utico

It will see the utilities firm taking up an 88% stake in the water treatment firm.

Embattled water treatment firm Hyflux may see potential white knight Utico take up an 88% equity stake in the company for $400m, a filing with the Singapore Exchange (SGX) revealed.

The parties are said to be progressing towards a deal subject to approvals from all stakeholders and definitive documents being finalised and entered into.

The proposed investment by Utico comprises $300m as equity and $100m as a shareholder loan. Utico has also informed Hyflux of its present intention to offer the cash equivalent of a 4% stake in the enlarged Utico group, plus additional cash to the holders of preference shares and perpetual capital securities. The details will be announced prior to the town hall to be convened for the holders of preference shares and perpetual capital securities.

“The parties have been actively engaged in discussions over the past few weeks including face-to-face meetings,” the firms said in its joint statement, adding that they have also met with representatives of various stakeholder groups to discuss the proposed investment for an agreement on 9 and 10 July

Also read: No binding agreement with Utico yet: Hyflux

“The intention is for the parties to enter into definitive documentation in respect of the proposed investment as soon as possible, and to hold town hall meetings in the coming weeks for the holders of perpetual securities and preference shares and the holders of medium term notes ideally before the next court hearing,” they said.

Utico first expressed its intent to inject $400m into Hyflux in late April after the latter’s deal with SM Investments (SMI) fell through in early April. Utico had previously hoped an agreement would be inked by 17 June, before extending the deadline for a binding agreement to 27 June.

Hyflux had continued to engage with other parties who had expressed an interest to invest in the group’s business and assets. It received a non-binding letter of intent from global multi-strategy investment fund Oyster Bay which considered investing up to $500m into the firm in May, whilst an unnamed state-owned power service firm from China has also indicated interest.