Hyflux investors told to wait until February for detailed restructuring plan

Hyflux investors told to wait until February for detailed restructuring plan

Investors left out on a limb by Hyflux will have to wait until mid-February to find out more about the embattled water treatment firm's revival plan and what that means for their investments. Brandon Tanoto reports.

SINGAPORE: Investors left out on a limb by Hyflux will have to wait until mid-February to find out more about the embattled water treatment firm's revival plan and what that means for their investments.

This was revealed to those that attended the second round of town hall meetings on Friday (Jan 18).

Investors were told to expect the announcement of a formal restructuring plan in about a month’s time.

They were also informed that they will receive cash and equities in the restructured Hyflux, although exact figures were not disclosed.

Those who spoke to Channel NewsAsia described the town hall sessions, each lasting for about two hours, as "nothing new" and said that more details about the company's survival roadmap could have been shared.

"I just wanted to hear something positive about how the restructuring plan is coming along, or how they plan to drive the company forward," said a noteholder who requested anonymity.

"But there is no conclusion. We still have to wait and see what they will propose in February."

During the question and answer segments, investors took the opportunity to press the panel – which included Hyflux founder-CEO Olivia Lum, as well as the company's legal and financial advisers from Ernst & Young Solutions and WongPartnership – for more answers on how much of their investments can be recovered.

Mr Martin Lee, who attended the evening session for perpetual securities and preference shareholders, said Hyflux could have taken the opportunity to share some information about its restructuring plan and gather feedback from investors present.

His question on why the company did not do so, posted on a Q&A platform, was not picked up by the panel.

"I posted this question after they said that they have been taking time to consult the various stakeholders and the plan should be out in mid-February," said Mr Lee. 

"They should not cut the session at two hours promptly. Just stay back to clear all the questions. If it takes three hours, so be it."

The second round of meetings on Friday comes more than seven months after Hyflux unexpectedly applied for a court-supervised debt restructuring, halted trading in all of its SGX-listed shares and left tens of thousands of investors reeling.

Since then, the company has found “white knights” in the form of SM Investments – made up of Indonesian conglomerate Salim Group and energy giant Medco Group – which proposed a S$530 million investment in exchange for a 60 per cent stake. 

Representatives of the consortium were present at the town hall meetings and gave a presentation to investors. But they declined comment when approached by the media.

Ms Lum, in her opening speech for the town hall sessions, described SM Investments as an investor that is "sincere" in reviving Hyflux and called on stakeholders to give them their support. 

"Without support for the rescue plan, the alternative for Hyflux would likely be liquidation. As some of our assets are located in very challenging jurisdictions overseas, liquidation will result in a much less favourable outcome for all stakeholders, particularly for the preference shares and perpetual security holders," she said. 

The chief executive also took the chance to address a repeated call from investors for her to save the company with her own money. 

"Many of you have been asking what I am personally giving to this company. But with SM Investments coming into the company, this is effectively a takeover and I no longer own much shares. In fact, almost no shares so I will no longer be in the driving seat."

Still, she stressed that she plans to stay on for as long as possible to ensure a smooth transition.

Even with its debt moratorium extended till end-April, the clock is ticking for Hyflux to propose a restructuring plan and have it passed by its creditors.

When asked if the company needs to up its game, Mr David Gerald, who heads the Securities Investors Association (Singapore) (SIAS), said Hyflux's debt restructuring process is a "complex" one.  

Given the sheer number of stakeholders involved, the proposal "cannot be cooked up within a few months", he told Channel NewsAsia after the first town hall session.

On how some investors felt more could have been said, Mr Gerald, who was moderator for the sessions, said he thinks that Hyflux has tried its best to answer investor concerns "without reservations".

The company has also been receptive to feedback and has, for instance, responded to SIAS’ call for an independent candidate to replace Ms Lum as chairman.

"Olivia has said she's fine with that and the board confirmed to me that they are looking for an independent chairman. But it’s not easy given the current status of Hyflux, people usually shy away," he said.

The founder of the investor advocacy group called for investors to be patient.

"By mid-February or thereafter, they will work out how much cash or how much equity for each group. There will be another town hall for investors to understand the basis for the distribution."

As to whether that would be an acceptable outcome for investors, Mr Gerald replied: "You have to ask what is the alternative and that is liquidation, which is nothing. If the company is doing its best to get you something, I would say something is better than nothing.

“But what is that something? The company is working that out now.”

All eyes will now fall on Hyflux's next case management conference to be heard by the court on Feb 11.

Source: CNA/sk(hm)

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