SINGAPORE — Beleaguered water treatment firm Hyflux and its subsidiaries have chalked up S$1.84 billion in bank debt, and the one-time poster child of Singapore entrepreneurship is trying to secure about S$200 million in rescue financing.

The depth of Hyflux’s financial woes has been revealed in affidavits submitted to the High Court by the firm's founder and group chief executive Olivia Lum, in its application for court protection to reorganise its debt pile which was heard on Tuesday (June 19).

If no moratorium was granted, the company could "run out of available cash in the next four to five weeks", the firm’s lawyers told the court.

At the end of the hearing in a packed courtroom, Justice Aedit Abdullah granted a six-month moratorium with immediate effect for the home-grown firm and its five subsidiaries — Hydrochem, Hyflux Engineering, Hyflux Membrane Manufacturing, Hyflux Innovation Centre and Tuaspring.

Once a market darling and trailblazer in the entrepreneurial scene, Hyflux's S$1.84 billion debt pile excludes S$900 million in subordinated debt and S$265 million of medium-term notes, the court heard.

According to court documents, the firm has signed non-disclosure agreements with seven potential financiers and strategic investors, and are negotiating similar agreements with more than 20 interested parties.

If successfully secured, the S$200 million will be used to see through ongoing projects, such as the TuasOne waste-to-energy plant and an independent water project in Qurayyat, a small fishing village in Saudi Arabia. The sum will also help the group secure new projects for the future, said Ms Lum in her affidavits.

The 56-year-old added that she was "confident" that the completion of these projects will open up more business opportunities for Hyflux in the future.

In arguing for a six-month moratorium, Hyflux's lawyers from WongPartnership, led by partner Manoj Pillay Sandrasegara, said a “short-term runway” creates uncertainty and may discourage third-party financiers from extending support.

A six-month period is needed for the firm to properly engage various stakeholders involved, including its banks, trade creditors and shareholders. Time is also needed for ongoing projects to be completed, which will provide "good value" and lend Hyflux the stability it is "badly in need of", the lawyers argued.

"The applicants require breathing space in order to discuss the details of its intended plan with its various stakeholders," they added.

The company plans to hold townhalls for investors and interested members of the public on July 19 and 20. These will be conducted with the help of the Securities Investors Association.

The firm, which recently posted its first-ever yearly loss since its public listing in 2001, halted trading of its shares and related securities on May 21.

On the same day, it applied to the court for protection to reorganise its business and deal with its liabilities. The application automatically gives the firm a 30-day moratorium against their creditors' claims, but its lawyers on Tuesday argued for extending the period to six months.

A shorter moratorium could also hamper Hyflux's plans to divest its interests in a desalination plant in Tianjin, China, as well as its landmark Tuaspring project — which have book values of S$140 million and S$1.3 billion, respectively.

Tuaspring, which combines South-east Asia's largest water desalination plant with a gas turbine power plant, has put a dent in Hyflux's bottomline. The firm has been in talks to sell a stake in the plant, its single largest asset, without success.

Tuaspring holds "tremendous value", Mr Sandrasegara argued on Tuesday, but the sale process "needs to be conducted in a careful and controlled manner".

"If it is a rushed process, it is likely that any offers will be made on a 'fire-sale' basis, and will not reflect true or fair value," he told the court.

In a media statement last month, Ms Lum said the Tuaspring project had not escaped the brunt of "depressed electricity prices in Singapore", despite improvements in wholesale prices in the last few months which had stemmed losses. A "sharper rebound" is needed to restore the group to previous levels of profitability, she had said.

On Tuesday, the court also heard that seven of Hyflux's bank lenders expressed support for the moratorium, but only four of them backed the six-month proposal.

Mizuho Bank and KfW Development Bank, represented by lawyers from TSMP Law Corporation and Cavenagh Law respectively, told the court they would support a shorter moratorium of two to three months. Nevertheless, KfW Development Bank said it might support a further extension if it sees "genuine progress made". Bangkok Bank was the third lender that did not support a six-month moratorium.

In granting the moratorium, Justice Abdullah ordered that Hyflux appear before the court at the three-month mark to provide an update on the progress of its reorganisation.

This will be an "adequate safeguard" for stakeholders who are concerned about the "relatively long" moratorium period, said the judge.