* hopes to raise S$250 million by listing water trust
* plans to use proceeds to pay bond holders
* is in talks with bond holders over default notices (Updates with details, quotes)
By Brenda Goh
SINGAPORE, Sept 10 (Reuters) - Waste-water treatment firm Bio-Treat Technology (BIOT.SI: Quote, Profile, Research) hopes to raise S$250 million ($174.3 million) within seven months by listing a water trust, to pay off bond holders that have issued default notices.
Singapore-listed Bio-Treat is talking to bond holders such as institutional investors Morley Fund Management, Merrill Lynch and Citigroup, which have urged a quick repayment on S$50.6 million ($35.29 million) worth of bonds.
Bio-Treat's Chief Financial Officer Alan Lau said a delay in the completion of projects in China, where the firm has water treatment plants, was a reason for not clearing the debt.
"We are not going to blindly agree with all the terms and conditions of the bond holders," Lau told Reuters in an interview. "We are trying to balance the interests of all our creditors and shareholders."
The bond holders are part of a S$206 million zero coupon convertible bonds agreement made in 2003 that reached their put-down date in January.The default notices have cast a shadow on the company's shares, knocking 79 percent off their value this year, versus a 23 percent fall in the benchmark Straits Times Index .FTSTI and a 16 percent drop in sector peer Hyflux Ltd (HYFL.SI: Quote, Profile, Research).
The planned water trust will contain up to eight of Bio-Treat's existing water-related infrastructure assets and will be incorporated in Singapore, Lau said.
Bio-Treat, which has a market cap of $112 million, has 15 waste treatment projects, seven completed and five to be finished by the end of the year or early 2009, Lau said.
"Our intention is to set up a business trust," he said, adding this would free up cash from its balance sheet.
Bio-Treat's plan to list the business trust follows a similar move by bigger rival Hyflux late last year when its business trust unit raised S$129 million.
But analysts said Bio-Treat will find it extremely hard to raise cash from investors, given waning investor appetite for new issues.
Morgan Stanley and UBS Equities have ceased coverage of the firm, citing a reallocation of resources.
"Market conditions have to be good for the business trust to do well but initial public offerings are generally not faring well these days," said a broker from a local securities firm.
Bio-Treat shares were 8.33 percent down by 0255 GMT, versus a 0.99 percent drop in the benchmark index. (Editing by Saeed Azhar and Neil Chatterjee)
