International Business & Economy Hyflux's 34,000 retail investors may get cash redemption from white knight Utico

Hyflux’s 34,000 retail investors may get cash redemption from white knight Utico

Clarity at last, as Hyflux' small investors may recover their losses and calls grow louder for accountability from both corporate entities as well as regulating agencies.

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Singapore—In what seems like a ray of hope for the 34,000 retail investors who stand to lose the money they had put into embattled water treatment firm Hyflux, the company’s would-be white knight, middle eastern utilities company Utico, announced on May 26 (Sunday) that it met with Securities and Investors Association Singapore (SIAS) CEO David Gerald to emphasise its commitment as an ethical investor to move toward solutions that would work for all parties concerned.

At the meeting between Utico and Mr Gerald, the advisors for both Utico and Hyflux were present, White & Case, Emirates NBD Capital (ENBDC) and Nicky Tan, as well as Mr. Manoj of Wong & Partners, representatives of Drew & Napier, PWC, among others.

The middle eastern company is offering “part cash redemption and also a hope for full redemption with a plan and exit option,” according to a press statement from Utico emailed to The Independent Singapore on May 26.

According to Richard Menezes, the Executive Vice-Chairman and Managing Director of Utico, “Full details can only be revealed later, but … small investors of up to $2,000 to $3,000 could get 50 percent cash redemption along with full redemption opportunity, while the rest of the investors could get a similar, but staggered and cascade deal.”

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Mr Menezes said that it is not only part of the ethos of Utico to build goodwill with every stakeholder, but it is also a requirement of the shareholders of the company.

He said that the company was “working towards investing in Hyflux as a going concern and not as a bankrupt organization and this would only work through retaining the goodwill of all stakeholders.

Furthermore, Mr Menezes said that if retail perpetual and preference shareholders (PNP) support the deal– offered to them and not to senior creditors, all investors would have the chance to get their money back.

Senior creditors, the statement explains “took an active business risk with a ringside view,” while PNP investors took “a passive blind faith risk.”

He asserted that “morally there remains some responsibility from Hyflux for the PNP predicament.”

Mr Menezes added that if PNP investors support Utico’s proposed deal, the middle eastern firm could consider listing in the country, and is indeed a “key player in the largest water market in the world today.”

Many have considered that it is the smaller investors who have ended up with the short end of the stick in the whole Hyflux situation. Some of these investors are calling for accountability from both corporate entities as well as the agencies that would regulate them.

One such investor is Patrick, a blogger for sgdividends.blogspot.sg, who called himself  “a victim of the Hyflux episode” in an email to TISG.

He wrote to TISG, “The ones who suffer are the retail investors. It kind of feels to me that the hardworking retail investors here are being milked while the companies are allowed to continue milking, by reason of the regulators not reining (sic) the latter in through effective deterrence and holding stakeholders accountable. The legal system here is out of reach of the common retail investor. The current system has to change.”

Utico meets with PUB as well

Aside from having met with Mr Gerard of SIAS, Utico held meetings with Public Utilities Board Singapore (PUB) CEO N.J. Hee. Utico told Mr Hee and his team of the company’s aim to acquire Hyflux and to aid in its rebuilding “as a key contributor to Singapore economy in the water sector. “

Utico was told by Mr Hee that all investors are welcome in the country. He added that “Singapore does not discriminate but looks plainly at the value proposition offered by any company,” according to the statement from the company.

Mr Hee added that Hyflux has, in the past, delivered good preheats to the nation. If solutions are found to its woes, it can again become a major player in its industry.

Utico is presently planning a town hall meeting that SIAS is arranging. This is dependent on Hyflux signing a binding agreement, as well as the court granting a moratorium to finish a desirable restructuring within a given time limit.

The water treatment firm will appear in the High Court on May 29 (Wednesday) for a hearing that will determine whether it will get a further reprieve from its creditors./ TISG

Read related: After severe cost-cutting, Hyflux’s Olivia Lum says the company has enough funds for 2-3 months operations

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