International Business & Economy New white knight to infuse S$400 million into Hyflux in the offing...

New white knight to infuse S$400 million into Hyflux in the offing as CEO Olivia Lum offers to draw a S$1 yearly salary

The would-be saviour for Hyflux has yet to be identified, though reports say that it is a developer and owner of power and water utilities in the Middle East

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Singapore— Embattled water treatment company Hyflux said on Thursday, April 25, that it received a non-binding letter of intent for a possible S$400 million investment from a firm in the Middle East. On the same day, its Chief Executive Officer, Olivia Lum, also announced that she will only be receiving a S$1 a year salary until the successful restructuring of the firm is accomplished.

Ms Lum’s high salary has been a bone of contention with numerous investors, some of whom stand to lose much of their life savings if Hyflux undergoes liquidation.

The would-be saviour for Hyflux has yet to be identified, though reports say that it is a developer and owner of power and water utilities in the Middle East. Hyflux also wrote in its exchange filing that the firm has a “reputable track record”. The investment from the white knight will be utilized for equity, working capital, and possible urgent interim funding.

Furthermore, the water treatment company says that it is in talks with other possible investors from overseas, specifically North Africa, the Persian Gulf and Australia concerning their interest in Hyflux’s assets and business, with some investors that Hyflux “would have synergy with.”

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At the same time, a number of banks have sought permission from the High Court of Singapore to file applications for Hyflux and Hydrochem to be placed under judicial management and/or interim judicial management, which was also indicated in Hyflux’s exchange filing.

Mizuho Bank, KfW IPEX-Bank GmbH, Bangkok Bank Public Company, BNP Paribas, CTBC Bank, The Korea Development Bank as well as The Korea Development Bank Singapore Branch applied on Wednesday, April 26, for the current debt moratoriums in respect of Hyflux and Hydrochem to be changed.

Judicial management “is a method of debt restructuring where an independent judicial manager is appointed to manage the affairs, business, and property of a company under financial distress. The company is also temporarily shielded from legal proceedings by third-parties, giving it the opportunity to rehabilitate.”

On April 25, the company applied for yet another extension on its debt moratorium at its case management conference. The company’s court-sanctioned protection from creditors is scheduled to end by the last day of the month.

Ms Lum said,“I have decided that henceforth, I will only draw a nominal $1 annual salary until Hyflux is successfully restructured.”

She also said that Hyflux’s board agreed that at the company’s next annual general meeting, there will be no director fees proposed.

According to SIAS, the Securities Investor Association, Ms Lum has earned over S$60 million in dividends “in the time that shareholders and bondholders have seen their entire investment destroyed”.

Two years ago, despite the company’s reported losses of S$115.6 million, the CEO was still receiving between S$750,000 and S$1 million in salary, benefits, and bonuses, SIAS said.
Earlier this month, a deal with its would-be white night, Indonesian consortium SM Investments, led by billionaire Anthoni Salim, fell through. This arrangement would have infused S$350 million into the beleaguered company.

Ms Lum also said that since SM Investments is no longer part of Hyflux’s future plans, discussions are now in progress between the company and Mitsubishi Heavy Industries and lenders on a liquidity support plan for the TuasOne Waste-to-Energy Plant that has been scheduled to start operations this year.

As of March 31, 2018, Hyflux’s debts totals $2.95 billion./ TISG

Read related: SIAS calls new Hyflux plan to avoid liquidation “credible” and a “win” for its 34,000 shareholders

 

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