Singapore: Some of the investors of Singapore’s beleaguered controversial water treatment firm Hyflux are planning on staging a protest at the Speakers’ Corner at Hong Lim Park on Saturday, March 30, from 3-4 pm.
Many investors are unhappy with how things have turned out and feel like they have gotten the short end of the stick. Some of Hyflux’s investors are now asking the Public Utilities Board (PUB) for goodwill.
The PUB announced last week that it will be taking over the desalination facility of Hyflux at Tuaspring for zero dollars. It will also disregard all combination claims should Hyflux fail to rectify its defaults.
The protest is led by Hyflux investor Alex Leong, 43, who told news outfits Channel News Asia (CNA) and The Straits Times (ST) about the protest. Mr Leong has obtained approval from both the police and the National Parks Board for the planned demonstration.
He told CNA that some of the investors have been planning the protest action for some time now, and that, based on the poll he took a few weeks ago, he expects many other investors to attend the protest.
ST reports that Mr Leong himself invested S$ 100,000 in the company back in 2011, and then reinvested dividends into Hyflux afterward.
Mr Leong told CNA that PUB’s plan is “ruthless” and has been a blow to the company’s retail investors, especially since their investments were used to build the plant, which is still operational and has value.
He said that perpetual securities and preference shareholders are hoping that they will still be compensated by the PUB “out of moral obligation or goodwill.”
He said, ”We understand the need for PUB to get its compensation as Hyflux has failed (in) its obligations under their water agreement, but we are trying to appeal to PUB to exercise goodwill towards investors like us.”
The creditors of the embattled firm are scheduled to meet on April 5 to discuss how to salvage the firm, which is heavily indebted. Approval for a restructuring plan needs to be approved by at least 75 percent in value of each creditor class as well as 50 percent in number.
The Salim-Medco consortium, SM Investments (SMI), has proposed a plan for restructuring that could possibly nullify almost 100 percent of Mr Leong’s investments if the creditors agree to the plan. SMI’s offer to rescue the firm includes a $530 million lifeline for 60 percent of the restructured company but says the deal will not push through if the default remains uncertified.
Needless to say, the investors are against the plan for restructuring, which would leave perpetual securities and preference shareholders with a recovery rate of 10.7 percent, which would be about 3 percent in cash and 7 percent in equity.
David Gerald, the president of Securities Investors Association Singapore (Sias), wrote a letter to the board of Hyflux on Monday, March 25, saying that investors have gotten anxious due to the notice of default from the PUB, as well as SMI saying they will rescind their offer.
The letter read, “It is generally felt that the company is creating further uncertainty by not issuing the revised scheme document to the creditors.
The company is not giving confidence to investors that it will resolve all outstanding issues to keep the restructuring deal with SMI on track.”
Hyflux has 34,000 retail investors, who stand to lose as much as 90 percent of their investments. They were once attracted to the company by two things: Hyflux seemed to be not only backed but endorsed by the Government, as well as a 6 percent annual return rate.
Central to the Hyflux fiasco is desalination and power plant Tuaspring. It cost S$1.1 billion to build, and was once touted as one of Singapore’s “national taps,” and seemed to be a lifeline in a country that has grown used to importing and harvesting rainwater for everyday needs.
Prime Minister Lee Hsien Loong himself opened Tusapring in September 2013, along with the head of the Public Utilities Board (PUB) with other Government officials in attendance. PM Lee lauded Tuaspring’s “unique and cost-efficient design” and called it “the latest milestone in Singapore’s water journey.”
However, Tuaspring has seen no profit and has, in fact, sustained considerable losses to the tune of S$2.7 billion.
https://theindependent.sg.sg/hyflux-investors-could-end-up-losing-90-percent-of-their-capital-in-upcoming-restructuring/