SINGAPORE: Aggrieved mom-and-pop investors of embattled water treatment firm Hyflux will get to attend an “independent” town hall meeting organised by the Securities Investors Association Singapore (SIAS) within the next two weeks.
This closed-door session will not involve representatives from Hyflux and is meant for retail investors to suggest “feedback and ideas”, said SIAS president David Gerald.
“This is an independent meeting between SIAS and investors, not with the Hyflux board,” Mr Gerald told Channel NewsAsia on Thursday (Feb 14).
“At the moment, it is tentatively set for Feb 25 but we will confirm in the coming days.”
The investor advocacy group is hoping that at least 1,000 retail investors will turn up.
Investors, however, will have to bear the organising cost, such as rental fees for a suitable venue, as SIAS is a non-profit organisation and “does not have the budget”.
The idea of having an investor-only town hall session was first mooted by Mr Tan, a holder of Hyflux’s perpetual securities and preference shares, who sent a petition to SIAS at the end of last month.
The investor advocacy group then decided to hold a closed-door meeting at its office with Mr Tan and 50 other retail investors on Tuesday (Feb 12) night to find out more.
SIAS-appointed independent advisors from Drew & Napier and PricewaterhouseCoopers were also present, according to investors that Channel NewsAsia spoke to.
During the more than three-hour long meeting, many retail investors voiced their concerns on the dearth of critical information from Hyflux so far about its financial operations and key assets.
They were also worried about the possibility of a foreign investor taking a majority stake in the company post-restructuring and are hoping for some Government intervention, given that Hyflux’s water business falls in the realm of national interest.
Mr Tan, who preferred to be known by his surname, said counter proposals were also raised.
These largely involve creditors waiving coupon payments owed to them and deferring future payments until Hyflux sees a turnaround.
This is currently not on the table as SM Investments – the consortium that offered Hyflux a S$530 million lifeline last October – has said its proposed investments will go towards the “full and final” settlement of the company’s debts and working capital needs.
Hyflux has a debt of almost S$3 billion, with about S$900 million owed to 34,000 holders of its perpetual securities and preference shares. Unsecured bank creditors are owed S$717 million, while unsecured contingent creditors and medium-term noteholders have claims of S$915 million and S$271 million, respectively.
“Investors do not want to vote either for SM Investments or liquidation but now, they are being made to choose either one,' said Mr Tan.
"What we cannot understand is why the (SM Investments) proposal makes sense, as opposed to creditors not taking interest and management reducing their remuneration as suggested by SIAS, (thus) allowing Hyflux to recover slowly,” he added.
“Of course, we are assuming based on Hyflux’s most recent financial report released in the first quarter of 2018. The company may have their reasons but everything has been shrouded in secrecy so we don’t know anything.”
Another shareholder, who attended Tuesday’s meeting at SIAS and requested for anonymity, said: “Many of us have been worried about what we can do but individually, we can’t do anything or move forward in any way.”
On his hopes for the investor-only town hall session, he added: “If we can get together to decide on a counter proposal, put it into a petition letter with our names signed during a town hall session, maybe we can get something done."
READ: Hyflux says it remains committed to ‘fair’ restructuring plan as worries among retail investors grow
HYFLUX'S TOWN HALLS "HAVE NOT BEEN EFFECTIVE"
Such frustrations and worries among minority shareholders have been building up since the second round of town hall meetings organised by Hyflux last month. Investors were told to wait until mid-February for a definitive rescue plan.
With that set to be announced in a matter of days, SIAS issued a myriad of queries to the company earlier this week and said it was “seriously concerned” that many questions regarding operations, valuation and accountability have not been addressed.
This does not help security holders to make informed decisions regarding the restructuring, SIAS added.
National University of Singapore’s Associate Professor Lawrence Loh said the strongly-worded letter was a “justified” move on the part of SIAS, as it pointed out several long-standing issues that remain unanswered by Hyflux.
With so much shareholder angst, Assoc Prof Loh said this indicates that Hyflux’s previous town hall meetings “have not been effective”.
“These questions are not new events that happened overnight. The ‘faults and defects’ in assets and remuneration packages are already in public documents or being asked by shareholders for a while now.
“We thought these could have been settled at the town halls, which clearly have not been effective. So much so that SIAS and its stakeholders now want to toss it out into the open," he said.