SINGAPORE - Hyflux has finally reached a restructuring agreement with Utico that will see the Middle Eastern utility take a 95 per cent stake in the embattled water treatment firm in a $400 million rescue deal.

The announcement on Tuesday afternoon (Nov 26) comes just days before a High Court hearing scheduled on Friday, which will determine if Hyflux can get an extension on its restructuring moratorium, set to expire on Dec 2.

Under the signed deal, Utico will take a 95 per cent stake in Hyflux's enlarged share capital for $300 million. It will also extend Hyflux a working capital line of up to $100 million.

A previous proposed rescue package involved Utico taking an 88 per cent stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan.

Under the new deal, of the $400 million, $250 million will go to senior unsecured creditors, including banks and suppliers. Schemes of arrangement for the finalised deal will have to be approved by Hyflux's creditors.

Mr Manoj Pillay Sandrasegara, head of restructuring at WongPartnership LLP and lead adviser for Hyflux, explained that the move from 88 per cent to 95 per cent "arose out of negotiations on a number of fronts, including this one".

"The senior unsecured creditors are to be allocated $250 million in settlement of all the senior debt of Hyflux. The perpetual and preferential holders of debt securities, depending on their election of the options available, would receive payment in the range of $50 million to $100 million."

He added: "Hyflux is confident of obtaining the required creditor and regulatory approvals to see this deal through, which should revive the business and offer a stronger return to the creditors than the break-up value. I estimate that if everything plays out as planned, the scheme would be passed and implemented by Q2 2020."

Some 34,000 retail holders of perpetual securities and preference shares (PNP), who are owed $900 million in total, can choose from two options under the deal.

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The first option is to be fully paid upfront shortly after the restructuring effective date, and the second option is to be paid in half-yearly intervals over a four-year period, The Straits Times understands.

The PNP holders who opt for upfront payment will be entitled to receive up to 50 per cent of the value of their debt securities holdings, capped at $1,500.

Those who opt for deferred payments, which will be paid in half-yearly intervals over four years, will be entitled to receive up to 50 per cent of the value of their debt securities holdings, capped at $1,500. In addition, they will also receive a pro rata share in an additional cash payout.

In the instance where all the PNP holders elect the deferred payment option, the quantum of the additional cash payout will be $50 million.

A spokesman for Utico said: "We are happy to be a white knight to revive Hyflux and build it to a greater company than it was. We hope to have full cooperation and support from all stakeholders."

Hyflux, Singapore's highest profile debt restructuring case, had been looking for a white knight investor after an earlier rescue deal with Indonesian consortium SM Investments fell through in April.

The United Arab Emirates firm is a developer of water and power infrastructure in the Middle East region. It is also the largest full-service private utility company in the UAE.