Hyflux shareholder organising Speakers' Corner protest on 30 March

Source: Hyflux

A shareholder of embattled Singapore water treatment company Hyflux is planning to stage a protest at Hong Lim Park’s Speakers’ Corner on Saturday (30 March) against its restructuring plans and recent developments.

The organiser, 43-year-old Alex Leong, told The Straits Times that he received approval from the police and the National Parks Board on Monday for the protest.

He expects many people to turn up, saying that a group of fellow Hyflux investors had been discussing a protest for some time.

Protest days before crucial vote on restructuring plan

Hyflux is currently in the midst of navigating an increasingly challenging attempt to restructure its staggering debts of almost $3 billion. News of the planned protest comes a mere days before a 5 April vote by Hyflux’s creditors on a restructuring plan, which needs at least 50 per cent in number and 75 per cent in value of each creditor class to be passed.

The restructuring plan, offered by SM Investments (SMI), could bail out Hyflux with a $530 million lifeline for 60 per cent of the company, but it had also threatened to leave the deal on 1 April unless the defaults were rectified.

Leong told The Straits Times that the plan could potentially wipe out 97 per cent of what he has invested so far, should creditors vote in favour of the plan. He had reportedly invested around $100,000 into Hyflux preference shares as part of the group’s fundraising efforts in 2011, and also reinvested all his dividends back into the company.

Appeal to PUB for ‘goodwill’

Besides venting displeasure over Hyflux’s troubled state of affairs, the protest – which will be held around 3pm – also intends to appeal to the Public Utilities Board (PUB) for goodwill over what the investors perceive as a raw deal.

On 21 March, the national water agency said it would take over Hyflux’s Tuaspring desalination plant at zero dollars and waive the compensation sum it is entitled to, if the company does not remedy its defaults by 5 April.

According to Channel NewsAsia, Leong said that PUB’s announcement has been “hard to swallow” for retail investors, given that their investments had been used by Hyflux to fund the building of the integrated plant. He hopes the agency can consider compensating the shareholders “out of goodwill”.

Far cry from high-profile rise

Hyflux’s current woes are a far cry from when it became the first water treatment company to be listed in Singapore in 2001. Its profile in the global water industry grew, winning it contracts in China, India and the Middle East.

Analysts say Hyflux may have taken on too many capital-intensive projects with long lead times, borrowed too much and was too optimistic with its projections. Its debts reached a tipping point when it was unable to divest its expensive Tuaspring desalination and power plant, and another in Tianjin.

The Tuaspring plant was built at a cost of $1.1 billion after winning a 25-year concession in 2011. Under the water purchase agreement signed with PUB, it has to deliver up to 70 million gallons of desalinated water per day to PUB for a 25-year period from 2013 to 2038. However, PUB says that Tuaspring has failed to keep the plant reliably operational as required.

Losses snowballed after its gas-turbine power plant started selling excess capacity in 2016 to the power grid, which had a glut of electricity caused by the opening of the market to competition.

Earlier on Monday, the Securities Investors Association (Singapore) wrote to the Hyflux board, stating that PUB’s notice of default and SMI’s threat to walk out have caused anxiety among investors. It noted that the cancellation of a scheduled town-hall meeting by Hyflux has also created anxiety, and the meeting had not been reconvened.

Algerian Energy

Separately, Hyflux said in a statement last night it has received a request for arbitration from Algerian Energy Company against the company and its partners Tlemcen Desalination Investment Company SAS and Malakoff Bhd in relation to its seawater desalination plant in Algeria.

Algerian Energy has filed the request with the International Chamber of Commerce’s (ICC) International Court of Arbitration in Paris, over disputes arising out or in connection with the water purchase agreement dated 9 December 2007.  Hyflux said it has until April 20 to file an answer to the arbitration request.

Hyflux said that due to the “uncertainty of the outcome of the company’s ongoing reorganisation process and the unpredictability of the financial outlook for 2019 the company is therefore unable to assess and disclose the financial impact of the arbitration proceedings on the group for the current financial year ending Dec 31, 2019.”

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