SINGAPORE: The Securities Investors Association Singapore (SIAS) on Monday (Feb 25) called on retail investors of Hyflux to consider their votes on the embattled company’s proposed restructuring plan “rationally”, as worries mount and a petition calling for the Government's help gets underway.
“I understand that there are many people who have ploughed in their life savings, especially some retirees, but don't vote in anger. Vote rationally,” said SIAS president David Gerald following a town hall session with some 200 mom-and-pop investors of Hyflux’s perpetual securities and preferences shares.
The investor-only meeting on Monday night did not involve any representatives from Hyflux as the investor advocacy group had intended this to be a session for minority stakeholders to raise concerns and clarify doubts with independent advisors from PricewaterhouseCoopers (PwC) and Drew & Napier.
Together with the three briefings held last week by PwC, Mr Gerald said SIAS wants to help retail investors "make an informed decision” ahead of Hyflux's court-approved creditors' meeting on Apr 5.
“Vote with your head and not with your heart,” repeated the SIAS chief, as he brought up how perpetual security and preference shares investors risk getting nothing in a liquidation scenario. “Do you want that? Think carefully.”
Still, Mr Gerald said he understands that retail investors are “anxious” after being allocated the smallest pie in the restructuring proposal, and noted that SIAS-appointed advisors are in discussions with the representatives of other creditor groups.
“But so far, we’ve not been told anything," he said in response to Channel NewsAsia's question.
According to Hyflux’s rescue plan announced on Feb 16, holders of “subordinated” perpetual securities and preference shares, which are lined up at the bottom of the priority list, are facing recovery rates of only 10.7 per cent of their initial investments.
This means for every S$1,000 invested, a perpetual security and preference shareholder will only get back about S$107 in cash and equity, if the restructuring plan is passed – a steep haircut that some have lamented as "too much to swallow" and would rather see Hyflux be liquidated.
READ: Hyflux lays out restructuring plan to revitalise business, but retail investors lament big losses
As the clock ticks down to the scheme meeting, a group of retail investors have launched a public petition urging for the Government to "take back" Hyflux’s Tuaspring Integrated Water and Power Plant.
Thus far, it has gotten more than 1,500 people to back it up since being launched online about four days ago. Efforts offline have also yielded about 400 signatures.
According to a copy seen by Channel NewsAsia, the petition said given Tuaspring’s status as a “strategic national asset”, an acquisition by the Government will not be a bailout but “rightful” action.
Costing more than S$1 billion to build, the Tuaspring integrated plant was the landmark project that marked water treatment icon Hyflux’s foray into the energy business in 2011.
But it eventually became the “noose” around Hyflux’s neck, as some market observers put it, chalking up losses on the back of depressed electricity prices in an oversupplied local power market.
The losses partially muddied the company’s attempt to find a buyer for the plant – which would be pivotal in repaying mounting debts – despite Tuaspring being put up for sale since early-2017.
READ: Hyflux’s Tuaspring plant: The ‘noose around the neck’ that needs to be sold, but can it be done?
Founder-CEO Olivia Lum had also previously said that approval from the local authorities is required “every step of the way” given the plant's value as a strategic water asset in Singapore.
Last October, Hyflux said it was assessing a bid submitted by one of the two interested buyers that have been approved by relevant authorities. But the bid by Sembcorp Industries, according to Bloomberg citing unnamed sources, came in below the plant’s book value of S$1.3 billion.
Since receiving the proposed S$530 million investment from Indonesian consortium SM Investments, Hyflux has said it is no longer actively pursuing a voluntary sale of Tuaspring.
An anonymous investor helping out with the petition told Channel NewsAsia on Monday that such policies, unfortunately, have contributed to the losses at Hyflux's single largest asset, and in turn the company's downfall.
“On Tuaspring losing money, policies have a part to play too with the low electricity prices in an oversupplied market," he said.
The need for Government approval further restricts the number of bidders for the plant, which in turn depressed bidding amounts, he added.
“The petition hopes there can be something done when it comes to Tuaspring," another investor known as Mr Tan chimed in. "The restructuring plan has also been very unfair to the perpetual securities and preference shareholders - maybe the petition can also force Hyflux to answer us."