UAE's Utico finalises $400m rescue deal for Hyflux

The company will acquire a 95 per cent stake for a $300m equity injection and provide a $100m credit line

ABU DHABI, UNITED ARAB EMIRATES. 15 JANUARY 2019. UTICO partnership with Oman company Majlis. Richard Menezes, MD and CEO of UTICO. (Photo: Antonie Robertson/The National) Journalist: Jennifer Gnana Section: Business.

UAE-based utility company Utico has finalised a $400 million (Dh1.1 billion) rescue deal for struggling Singapore-based water treatment company Hyflux, which will see it take a 95 per cent stake in the company.

Under the deal, Utico will subscribe to new shares that will give it control of 95 per cent Hyflux, in return for a $300m equity investment, Hyflux said in a statement to investors on Tuesday. Utico is also providing a $100m credit line to Hyflux as working capital.

"We are happy to be a white knight to revive Hyflux and build it to a greater company than it was," Utico said in a statement to The National.  "We hope to have full cooperation and support from all stakeholders. In the coming weeks, we will be holding a press conference in Dubai to [formally] announce the deal."

Hyflux has been trying to restructure its debt since May last year, when it gained a moratorium on a debt pile, which stood at over $1bn Singapore dollars (Dh2.69bn) as of September 30 last year, the period for which company's last accounts are available.

The company declared an impairment loss of over $913m Singapore dollars during the three months ending September, linked to its Tuaspring desalination plant - a loss-making investment, which was eventually was nationalised by Singapore's national water agency, PUB, earlier this year to "safeguard Singapore’s water security".

Hyflux, listed on the Singapore Stock Exchange since 2001, employs 2,500 people globally, according to its website. Utico is a privately-owned utility company which has Abu Dhabi-based Ghantoot Group as a major shareholder. It owns desalination plants with a combined capacity of 300 million litres of water per day and 120 megawatts of power. It also has plants with capacity to produce a further 150 million litres per day under development and construction.

The company, run by chief executive and managing director Richard Menezes, in January announced a $400m investment from Majis Industrial Services, an Omani government entity, which took an undisclosed minority stake. It had also previously received $145m of investment from Asma Capital in 2017.

The deal to acquire Hyflux is still subject to approval by the courts in Singapore and by the city-state's capital markets regulator.