Late night meeting flags Hyflux investors’ struggle to lose less
By Ameya Karve
(Bloomberg) -- Investors in Singapore’s struggling water treatment firm Hyflux Ltd. trickled out of a windowless hall in a downtown convention centre late Monday night.
They’d gathered for a town hall with one of the suitors for Hyflux, which was once a high-flying symbol of Singapore’s entrepreneurial might before a stumble in 2018 made it the city-state’s highest-profile distressed debt case. The fall has left some 34,000 retail investors in the lurch and prompted a rare public protest in Singapore.
The meetings Monday were with Middle Eastern utility Utico FZC, which reached a deal in November to rescue Hyflux. Utico needs investor approval for that deal, and had called the town halls to press its case while threatening to walk away if it can’t win support.
One of the investors at the convention center Monday was P.K. Goh, a retiree who said he could likely recover only 3%-6% of his investment if the Utico deal went ahead, but that he saw no viable alternative.
“It’s been a tiring and painful process with little hope of a slightly bigger recovery,” he said. “For retirees like me, it wipes out a good fraction of our savings and we have little runway to work to shore up those savings.”
Hyflux’s problems began in recent years with an ill-timed expansion into the energy-production business, which has struggled with overcapacity after market liberalization. The company began a court-supervised reorganization process more than 18 months ago.
Investors have been left facing more uncertainty after a mystery rival suitor called Aqua Munda Pte made a surprise offer last month to buy the company’s debt.
As the two companies are locked in a battle for control of Hyflux, there’s still no clear timeline on when the debt of the noteholders will get settled.
Hyflux has sought another three-month extension of its debt moratorium, one in the series of many since the court-supervised restructuring process started in May 2018.
Hyflux is taking too long to close the deal and this has led Utico to plan to make payment to noteholders in two parts, the Middle East utility’s CEO Richard Menezes said in one of the town halls.
The Hyflux deal may get delayed further if shareholders start bargaining about the price, he said. Utico is more hopeful about the senior creditors -- including banks and medium-term note holders -- approving the deal, Menezes said.
Among the preference shareholders and perpetual note investors, which rank lower in payment priority to senior creditors, Utico is confident of securing the minimum 50% majority, partly needed to approve the deal.
Utico also needs approval of at least 75% of the total value of perpetual note and preference shareholdings for the passage of deal. Menezes expects it may get 60% and the rest will depend on how many big investors vote for the deal.
© 2020 Bloomberg L.P.
