Utico yesterday announced that it has extended its term sheet signature validity for Hyflux to 27 June 2019 after the Singaporean company met key milestones for information submission on June 10 and subsequent discussions and meetings.
The previous deadline for Utico’s term sheet validity expired on June 17.
In a statement Utico said the decision to extend the term sheet validity was taken by Utico’s Board of Directors following discussions and negotiations between advisors of Hyflux and Utico and senior management.
“Utico is interested to acquire Hyflux Ltd. as a going concern,” Mr. Richard Menezes, MD of Utico said, adding that “since with further passage of time the valuation of Hyflux will have an adverse impact and addition of further risks, a long stop offer validity and conditions were set by its Board.”
An official communication to this effect had been sent to Hyflux on June 17.
As per the communique to Hyflux, Utico has requested that a PNP town hall is arranged during the week commencing 7 July 2019 if a binding agreement is entered into in line with the time line referred to above.
The Board noted that this extension decision, and decision to apply a long stop date of 27 June, was also in the interest of all stakeholders, including creditors, clients and PNP holders.
“For all stakeholders, including PNP, we believe that further loss of time and uncertainty will lead to greater losses in value as well,” according to Mr. Menezes. Mr. Menezes also reiterated that “such a situation was not caused by Utico,” adding that “our goal is to secure a win-win resolution with an agreed quick transaction process with all stakeholders.”
“This proposed timeline will help to ensure a clear road map with a viable business outlook for the company, in turn leading to the achievement of the required successful restructuring,” he said.
Utico also noted that it remains committed to its earlier communication regarding the PNP settlement including part cash redemption, and hope for eventual full realization of investment, with a plan and potential exit option.
However, full details will be revealed once both parties reach a binding agreement on the terms of the deal. “As a key part of the overall deal, small PNP holders of up to S$2,000 to 3,000 could get up to a 50% cash redemption with a possibility of additional upside, while the rest of the PNP holders could get a staggered and cascaded deal,” Mr. Menezes said.
Mr. Menezes further stated that “for all banks and vendors, I believe that working with Utico as owner of Hyflux will be a better experience, since we have never defaulted with any bank or vendor in our long history of success. Also Utico typically has one of the lowest gearing ratios for a major international water player. I believe that it could be a win-win-win relationship.”
Further, Mr. Menezes reiterated that he expects that a fair and reasonable deal will be reached for investors, in particular the PNP holders who took a passive role in their investment and have suffered large losses, if they support the deal.
Utico is currently seeking collaborative investment opportunities in many regions, to increase its returns and deploy capital and expertise to build value for the company and customers, he said.
As an ethical investor with an open mind to partnerships and business relationships coupled with a long standing successful and reputable expertise in the sector, Utico is in a prime position to benefit from the US$50billion independent utility projects opportunities coming up in the GCC region particularly in the UAE, Saudi Arabia, Oman and other GCC & Middle East.
Sovereign institutional investors in Utico from Saudi Arabia, Oman, Bahrain from the GCC, and the Nation of Brunei, makes Utico’s growth story even more compelling and of interest for collaborations with authorities as well as other players, the statement said.