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Hyflux attracts another white knight offering potential S$500 million lifeline

SINGAPORE — Another white knight is looking to come to the rescue of debt-ridden water technology firm Hyflux, which has been racing against time to find an investor.

The possible deal with Oyster Bay Fund comes two weeks after Hyflux revealed that it had received a potential S$400 million lifeline from another white knight, United Arab Emirates utility company Utico FZC.

The possible deal with Oyster Bay Fund comes two weeks after Hyflux revealed that it had received a potential S$400 million lifeline from another white knight, United Arab Emirates utility company Utico FZC.

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SINGAPORE — Another white knight is looking to come to the rescue of debt-ridden water technology firm Hyflux, which has been racing against time to find an investor.

In a company filing to the Singapore Exchange on Friday (May 10), Hyflux announced that it has received a non-binding letter of intent from Oyster Bay Fund.

The global investment fund is looking to invest S$500 million, subject to approval from regulatory authorities, due diligence and the execution of a definitive agreement.

The possible deal with Oyster Bay Fund comes two weeks after the struggling company revealed that it had received a potential S$400 million lifeline from United Arab Emirates utility company Utico FZC.

These developments come after an earlier rescue deal from Salim-Medco Investments (SMI) was scuppered, with Hyflux and SMI pointing fingers and taking each other to court.

Hyflux has been undergoing a court-supervised restructuring process since May last year after chalking up debts amounting to nearly S$3 billion.

In the filing, Hyflux said that Oyster Bay Fund is prepared to buy preference and ordinary shares in HyfluxShop Holdings for up to S$26 million as an indication of its “good faith and intent”.

The money, as understood by Hyflux, is to be used as working capital.

Hyflux currently owns a 30 per cent stake in HyfluxShop, which is the group’s consumer water business.

In February last year, months before Hyflux called for court protection against liquidation, its shareholders approved plans by the management to distribute 70 per cent of HyfluxShop shares to existing Hyflux shareholders for free.

On Friday, Hyflux said Oyster Bay Fund has indicated that it is “keen” to work with the water treatment firm and its advisors on the terms and execution of a binding agreement as soon as possible.

The letter of intent would automatically terminate if a judicial manager or liquidator is appointed over Hyflux.

Earlier this week, Hyflux fended off a bid by seven banks to start the legal process to place it under judicial management, and the High Court also extended the deadline for its debt moratorium with creditors by five days, to May 29.

Hyflux is also engaging with other parties who have expressed an interest to invest in its business and assets. Priority is given to those willing and able to provide interim funding and reach a binding agreement with the company within the shortest time possible.

National water agency PUB said on April 17 that it will terminate its water purchase agreement with Hyflux and take over its loss-making Tuaspring Desalination Plant.

PUB will take over the plant 30 days from the day the notice was issued.

Under the water purchase agreement signed with PUB in 2011, Tuaspring has to deliver up to 70 million gallons of desalinated water per day to PUB for a 25-year period from 2013 to 2038.

However, Tuaspring has failed to keep the plant reliably operational as required, PUB said.

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