SINGAPORE: Embattled water treatment firm Hyflux has a “credible” revival plan on the table and will apply for an extension of its debt moratorium this week in a bid to work things out, according to the Securities Investors Association Singapore (SIAS) on Monday (Apr 22).
The plan, which will need “at least three months” to materialise, will be a “win” for the aggrieved 34,000 holders of Hyflux’s perpetual securities and preference shares as there is a chance that they will not have to endure haircuts, said SIAS president David Gerald.
Mr Gerald was speaking to CNA after a closed-door meeting with Hyflux’s founder-CEO Olivia Lum, directors and a legal advisor from WongPartnership. Mr Nicky Tan of nTan Corporate Advisory, a well-known restructuring specialist who was recently roped in by Hyflux, was also at the meeting held at SIAS’s office on Monday afternoon.
The session, initiated by SIAS to find out if Hyflux had a back-up plan following the termination of a crucial rescue deal last month, was a “fruitful” one, said Mr Gerald.
But he declined to talk about specifics of the new plan as it will have to be first submitted to the Singapore court in an affidavit for the case management conference on Thursday.
“They have revealed that they have been actively working on another new plan. They can’t reveal the full details but having discussed with them behind closed doors, I’m quite optimistic.”
When asked if the new plan involves another white knight, Mr Gerald would only say: “There is no mention of a white knight but there are many ways to skin a cat … It doesn’t have to be the way it happened the last time.”
He noted that the advisors have come up with a “new way of restructuring the company” – one that would ensure both the senior unsecured creditors, and the “subordinated” perpetual securities and preference shareholders, are “much better off than in a liquidation”.
“For the perpetual securities and preference shareholders, they get nothing if there’s no plan. They wanted something reasonable so the company will now keep (them) whole on the book and they will not be asked to take a haircut,” said Mr Gerald, though he declined to speculate how that might be done.
Still, he called for patience and urged all parties to give Hyflux time to work out a plan to avoid liquidation.
"Given the hard work that’s been put in and the injection of new advisors, I think we can hope for the best," said the president of the investor advocacy group.
Some investors remained skeptical of the latest update and told CNA that they are not getting their hopes up yet.
“It's a good development but we really don't know what it entails,” said Mr Tony Chiam, who owns Hyflux’s perpetual securities, preference shares and ordinary shares.
“Having bitten once, we are (more likely) to believe the worse,” he added, referring to the previous restructuring deal which asked retail investors to accept losses of nearly 90 per cent. “Investors (have) become weary and skeptical over time.”
Unless the new plan shows that the company has the interests of its junior creditors in mind, Mr Chiam said many retail investors would still prefer Hyflux be liquidated.
SOLVE DISPUTE “AMICABLY”: SIAS TO HYFLUX AND SM INVESTMENTS
It’s been a torrid few weeks for the former star water treatment firm, marked by a public protest staged by angry retail investors and an unexpected U-turn in its S$530 million rescue deal with Indonesian consortium SM Investments.
The latter has left market observers speculating that Hyflux is edging towards a liquidation, with its court-sanctioned moratorium set to expire on Apr 30. To get more time to keep creditors at bay, it has to file applications to the court by Thursday.
To add to its headaches, national water agency PUB said on Apr 17 that it will take over the Tuaspring desalination plant in 30 days, while financial regulators here also said last week that they are reviewing the disclosure and accounting practices of the debt-stricken company.
Meanwhile, Hyflux has taken its spat with would-be white knight SM Investments to the courts. The Indonesian consortium retaliated a few days later, noting that it will also be suing the Singapore firm.
Both parties are now vying for the S$38.9 million deposit, which was placed in escrow shortly after the execution of the restructuring agreement.
On that, Mr Gerald said he is calling for both Hyflux and SM Investments to settle the lawsuits “amicably and quickly” in light of the new plan, as well as how the fate of Hyflux is keenly watched by many retail investors who have put in large amounts of their savings.
“I call on both SM Investments and Hyflux to come to a quick settlement.”