Is Debt Moratorium Just an Excuse by Hyflux?

Is Debt Moratorium Just an Excuse by Hyflux? 

Back in 1989 when Lum sold her apartment to solve the world’s problems by setting up a business, he must not have ever imagined that his firm Hyflux would be so deep in debt ever.

To the relief of the water-treatment firm, the Singapore High Court in a hearing today permitted two more months of reprieve from its creditors. The company has strong support of Utico, its biggest investor and other unidentified investors which are helping the firm to develop a restructuring plan.

Foregrounding that a case management conference will be kept on Oct 31 in order to check the progress report of the rescue deal, Justice Aedit Abdullah announced that the debt payment will be extended till Dec 2. Any party can send an application to the court prior to that so that the actual hearing to be held on Nov 29 can be scheduled accordingly.

The first extension was taken by Hyflux up till August 2. Post this, it applied for another extension so that it has more time to shut a rescue deal with Utico that got approved today. From a creditors’ point of view, the previous extension was not properly utilised by the firm. This in turn reduces the credibility of the firm that will negatively impact the shares of the firm in the long run.

As per reports, Utico is planning to offer the same amount of cash as a 4 percent stake in the enlarged Utico group plus additional cash to PNP investors.

A senior partner at Tan Kok Quan Partnership, Eddee Ng. was against the extension request as his firm owed $648.7 million to Hyflux.

In a statement released on Friday, Utico stated that it is extending full support to Hyflux to overcome its financial issues. Soon after SIAS (Securities Investors Association Singapore) said that it is fully supportive of Hyflux’s request of the debt moratorium. However, on September 29, SIAS withdrew its support saying that the firm is yet to reach a finalised deal.

Speaking of the same, CEO and Founder of SIAS David Gerald said that the news comes as the relevant parties have so far not agreed to the terms of restructuring agreement. So the final outstanding issues are yet to be resolved.

Looking at the past actions of the firm, it is highly uncertain that Hyflux will be able to pay back its debt on time. But as a creditor, Utico would want to believe it will!

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