Q&A from Second Townhall Meeting for Holders of Perpetual Capital Securities and Preference Shares

Questions marked with * have been answered during the townhall session

Reorganisation Exercise

Restructuring plan vs Worst case scenario

In the worst case scenario of liquidation, how much can we expect to get back? 0? 20%? 50%?
Is it true that we will only get 5% back? If this is the case, we would prefer to have it liquidated.
400m injection, 200m for working capital, 200m to wipe-out all $2 billion of claims from creditors. Each one gets 10% of principal back. SMI gets 60% of Hyflux. Mr Gerald, should creditors not push for liquidation?
EY said that Hyflux is not a viable business but Olivia said Hyflux has a viable business. Who is deceiving us?
What will be the worst case for us securities holders?
*On hindsight, did court protection really help? How badly has Hyflux financials deteriorated since court protection was applied? Would it be better to liquidate instead?ead?
How is the company doing for last one year since Hyflux has taken a backstep? What is the extent of loss in the last one year?
  1. In a liquidation scenario, banks and noteholders have an estimated return of between 3.8% to 8% of their debt.
  2. As the perpetual security holders’ and preference shareholders’ interests are subordinated to those of the banks and noteholders, they will not receive any return in a liquidation scenario (ie, 0% return).
  3. A liquidation scenario is thus the absolute worst case scenario for the perpetual security holders and preference shareholders.
  4. As explained by EY, in mid2018, Hyflux started facing cashflow issues such that absent moratorium protection, it may have been faced with a liquidation scenario.
  5. The moratorium protection ordered by the court as part of the court-supervised reorganisation process has provided Hyflux with breathing room to restructure its financial obligations.
  6. During this time, Hyflux has utilised the protection afforded by the moratorium to manage costs, optimise operations, divest assets and seek out a strategic investor.
  7. As reflected by interest from SMI and other strategic investors, Hyflux has a viable business. Restructuring its financial obligations will strengthen its balance sheet, and make it better placed to compete for and secure projects.
  8. In particular, as indicated at the previous townhall, Hyflux has endeavoured to keep the interest of the perpetual security holders and preference shareholders in mind, and seeks to secure fair returns for these stakeholders, balancing the short-term returns together with the potential gains from participating in a revived Hyflux group backed by the strengths of the SMI group and its potential synergies.
*Is there a need to consider restructuring the perpetual instruments as there is no legal obligation for Hyflux to redeem them? Has it been considered to just continue paying the contractual interest?
*In the event of converting all bonds, notes and preferential shares to the ordinary shares, what would be the formulas used to determine the fair values before and after the conversion?
What is the tangible plan to get back to profitability so that all stakeholders get back their investments without taking a haircut?
*With entry of Indonesia Investors, (i) is Hyflux continuing to operate and give dividends? (ii) When is Hyflux planning to start trading? (iii) What can we expect as Preference Shareholders?
What is the most beneficial option proposed currently now for CPS Holders?
 Why did it take so long for the restructuring plan to activate? Now that the white knight Salim Group is on board, are they going to pay back all the perpetual investors???
How can we be assured we will be treated fairly under any debt for equity swap such that there will not be any buy-out from Salim before the share price recovers?
Could the restructuring plan consider to payback preference and perpetual shareholders’ principal in 10yrs, without interests instead. For example, 10% (of principal) every year.
*Is there any chance at all to restructure our perpetual securities into new bond like securities and NOT equity?
How is the dividend payout going forward?
Do not confuse fixed income instrument investors with equity shareholders. Those who buy fixed income instruments are after the fixed and certain interest payments. They do not want any equity risks.
Should all capital be repaid first: e.g. Maybank should not be paid interest until perps and pref securities have received their capital back? (Interest unpaid only repaid after Capital repaid).
Maybe the company can consider to paying the dividend by issuing ordinary shares for a period of time if having cash flow issues?
If SMI takeover is successful, what will perpetual bondholders get?
As of now, what is the indicative % on the dollar we can recover with this consolidation?
How can a value be agreed on the equity with Salim before debtholders have been consulted. Based on the numbers there is no value for perpetual holders which should mean no value for equity
Most, if not all are interested what shareholders will be entitled to? Please give us some views on that.
Salim group talk so much. Inside their plan, what do perpetual securities and preference shareholders get?
Any indication what percentage of amount invested by preference shares holder we would expect to get back, either cash, shares or combination of both?
What are the advisors and BOD doing to ensure that all stakeholders are being treated fairly without any group being favoured over others? What reassurance can be given to ensure that pref s/holders will be treated fairly?
PwC already hinted at debt-free restructured Hyflux but Salim group is investing $400+mil only. Priority is given to secured debt holders also so can I presume note holders will get close to nothing?
  1. The plan will deal with all Hyflux liabilities (including in respect of banks, contingent liabilities, trade parties, notes, perpetual securities and preference shares).
  2. The restructuring plan is still being negotiated with all stakeholder groups, including the steering committee for the perpetual security holders and preference shareholders.
  3. The views of all stakeholder groups are being taken into account in formulating the terms of the plan.
  4. Notwithstanding the strict legal rights of each stakeholder group, the restructuring plan will seek to achieve an equitable outcome for subordinated stakeholders.
  5. The parameters are that perpetual security holders and preference shareholders receive some cash and ordinary shares.
  6. Returns would be zero if perpetual security holders and preference shareholders take enforcement action instead to liquidate Hyflux.
  7. SMI’s investment is also conditional on the settlement/discharge/redemption of all perpetual securities and preference shares and other Hyflux financial obligations.
  8. Hyflux will emerge from the restructuring mostly debt-free so that it can strengthen its balance sheet and establish a longer-term, sustainable liquidity solution for its business.
  9. The Hyflux Group will still have project finance debt at the subsidiary level.
  10. The aim is to ensure the viability and value of new Hyflux so as to enhance long-term returns on equity (which may include the future distribution of dividends).
*Will you be paying the interest for the perpetual securities in May this year?
*As holder of the Perpetual Bonds, are we supposed to consider the defaulted bond payments as write-offs or will Hyflux pay back when it has recovered?
Given 2 missed coupon payments for the PCS in 2018 & 3rd payment due April 19, when will Hyflux pay in view these payments are cumulative? How about redemption for the PCS?
Coupon was declared in May 2018 & yet it was not paid out. Doesn’t it trigger a default? Least Hyflux management can do is to honour it and make declared payout as the most of us need this to survive.
After the restructuring, will the accrued interest unpaid be paid in full?
Maybe the company can consider to paying the dividend by issuing ordinary shares for a period of time if having cash flow issues?
Does Hyflux honour the last interest which was approved and posted on SGX prior to suspension of PCS?
  1. All missed coupon payments, interests thereon, together with the principal for the securities will be restructured as per the scheme (restructuring plan). The scheme will be proposed by mid-February 2019. Financial information to assist stakeholders to assess the restructuring plan will be made available prior to the scheme meeting. The scheme meeting is expected to be held at the end of March 2019.
*When will the restructuring plan be ready, given that so much time has been given?
Please let us know how long the process will be? 1 year, 2 years?
SMI talked about the plans to reorganise Hyflux but there is no timeline? How long will it take?
When will the trading suspension be lifted? I think the duration is already long enough for us to make informed decisions.
  1. The restructuring plan will be announced by mid- February 2019.
  2. Once the details of the restructuring plan are announced, there will be a further townhall meeting that will be held on 13 March 2019 to discuss with the perpetual security holders and preference shareholders the terms of the restructuring plan and the mode and duration of its implementation.
  3. Once the court-supervised restructuring process has been completed, the trading suspension will be lifted.
*For the voting of the restructuring proposal, are all conflicted person (e.g. Ms Olivia Lum) excluded from being able to vote.
What if note holder vote against the restructuring as they are not interested in conversion to shares but shareholder vote for?
How fast can liquidation be if all vote for it?
For the voting of the restructuring, what is the % required for the restructuring to be carried out? 50%? 70%?
  1. Ms Lum and other board members who own perpetual capital securities and preference shares will be able to vote in respect of those interests.
  2. Their interests in these perpetual capital securities and preference shares will be fully disclosed and explained at the time the restructuring plan is proposed.
  3. Each class of stakeholders will be explained at the time the scheme of arrangement is proposed.
  4. The restructuring plan will only be passed if a majority in number holding at least 75% in value of each class of stakeholders votes in favour of the scheme.
  5. Unless the restructuring plan is approved at the scheme meetings, shareholders will not be required to vote at an EGM.
  6. As the passing of the scheme is a condition precedent to SMI’s proposed investment, SMI will be entitled to walk away from the deal if the scheme is voted down at the scheme meetings or rejected by the shareholders at the subsequent EGM.
  7. The moratorium will also expire and Hyflux will be subject to enforcement action from its unsecured creditors.
  8. A liquidation scenario (ie, worst case scenario for the perpetual security holders and preference shareholders) is likely to follow if the scheme is voted down.
Without providing us with the full and audited financial report, how did EY derive the return from the liquidation scenario?
How are we going to assess the merits of the Scheme if we do not have Hyflux’s recent financials?
*Will the latest financial statement ready before voting for the scheme?
  1. Financial information to assist stakeholders to assess the feasibility and value of the restructuring plan will be made available prior to the scheme meetings.
  2. Management accounts have been disclosed monthly since the commencement of the court-supervised reorganisation process. These may be accessed at: https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/
  3. Pursuant to extensions obtained from the SGX, Hyflux will announce its 2QFY2018 Financial Statements, 3QFY2018 Financial Statements and FY2018 Financial Statements by 30 June 2019 or before the lifting of the suspension on trading. Please refer to the announcement in the following link for more information: http://investors.hyflux.com/newsroom/20190128_161822_600_P8YLNZWOKM8HC60B.1.pdf
Regarding the steering committee, has one been formed? Who is on this committee? What are their credentials? Are all stakeholders (creditors / shareholders etc) represented?
Previous Townhall promised committee to be formed to represent the CPS and Pref holder. It was mentioned legal advice will be provided, what happened to it?
  1. A steering committee for the perpetual security holders and preference shareholders has been formed by SIAS.
  2. Legal advisors (Drew & Napier) and financial advisors (PwC) have been appointed to advise the steering committee.
  3. The steering committee advisors have been engaging with Hyflux’s advisors on the restructuring plan.
  4. Perpetual security holders and preference shareholders can provide feedback to the steering committee by contacting their advisors or SIAS.

Contingent liabilities

*What constitutes the Contingent liabilities? Why is the amount almost $1 billion?
  1. Contingent liabilities are liabilities that will only crystallise upon the occurrence of a future event.
  2. Hyflux’s contingent liabilities primarily arise from its Project Investments such as the TuasOne WTE Project and the Qurayyat IWP Project.
  3. For example, Hyflux has issued guarantees to the respective off-takers in respect of the construction or performance of certain Projects. If the stipulated construction or performance under those guarantees are not achieved, financial and other liabilities may accrue.
  4. Another example is the potential liquidated damages that may arise from EPC contracts as a result of delay in completion of construction.
  5. However, it should be noted that not all contingent liabilities will crystallise if Hyflux continues as a viable business. For example, if the relevant deadlines for construction under EPC contracts are met, then no liquidated damages will arise (ie, contingent liability does not crystallise).
  6. In contrast, if Hyflux is liquidated, it will not be able to continue with and complete its Project Investments or perform its other contractual obligations. This will likely result in the crystallisation of the contingent liabilities.

Strategic Investor Search Process – Selection of SMI

*Why did Hyflux bring in a dark knight into this restructuring as bond and shareholders will be severely diluted. Why not consider restructuring with debt extension like Ezion?
When the Salim deal was announced, why did Ms Olivia Lum say it is a happy day and the problem is just a flu? Why try to write-off the debts? Is Salim a white shark instead of white knight?
Now that Hyflux have sign an agreement w salim, does that mean no other white knights will be considered?
  1. The search process for a strategic investor yielded 16 potential parties.
  2. These parties included American, European, Mainland Chinese and Southeast Asian parties as well as private equity funds.
  3. The offers made ranged from a total investment of S$400 million to S$600 million (with the equity portion ranging from S$250 million to S$530 million for an equity stake ranging from approximately 51% to 86.4% of Hyflux’s shareholding).
  4. The majority of these offers were not final offers but subject to conditions (e.g. due diligence or future performance targets).
  5. After several discussions with the potential investors, SMI was selected following a careful assessment of all the offers.
  6. The factors considered included:
    1. The value of the investment
    2. The conditions imposed by the offeror/certainty of the offer
    3. The financial ability of the offeror to complete the investment
    4. The timing within which the offeror could complete (bearing in mind the liquidity crunch)
    5. The offeror’s synergies with Hyflux which could effectively revitalize the business.
  7. With the synergies and opportunities from being part of the larger Salim-Medco Group, Hyflux will have a bigger and more regional platform than before.
  8. SMI’s investment is subject to acceptance of a restructuring plan that fully settles Hyflux’s financial obligations (bank debt, medium-term notes, perpetual capital securities, preference shares, trade debt and contingent debt).
  9. A restructuring by way of debt extension (like Ezion) is not feasible for Hyflux:
    1. Hyflux was facing a liquidity crunch at that time it commenced the court-supervised reorganisation process and this remains the position today.
    2. The EPC business requires a lot of capital and a strong balance sheet in order to compete and win new projects.
    3. Capital is also required to complete ongoing projects such as TuasOne and Qurrayat.
    4. Debt extensions would not help Hyflux properly address the issue.
    5. A strategic investor is necessary to strengthen the balance sheet and revitalise the business.
  10. The Board believes the SMI offer is thus far the best offer received. Based on the strengths of the SMI group and the possible synergies, Ms Lum shares the hope that, with or without her as CEO, Hyflux can continue into the future and stands a chance of returning to or even surpassing its best days of the past.
  11. Notwithstanding this, the investment agreement with SMI contained a short exclusivity period which has since expired. Before the scheme meeting on the proposed investment at the end of March 2019, the Board will consider any better offer that is received. To-date no other offers have been made.
*What special demands will the Indonesian strategic investors place on Hyflux?
Is the new investor willing to take on all financial obligations of Hyflux, especially those to the retail investors (ie pref shares, etc)?
Was SMI the only strategic investor asking for all these outstanding liabilities to be written off?
*Will there be asset injections into Hyflux by the new consortium after take over?
  1. All the interested potential investors had similar conditions for the settlement of Hyflux’s financial obligations (including those in relation to the perpetual capital securities and preference shares).
  2. In light of SMI’s financial clout and synergies, there are opportunities for collaboration that can be explored if SMI proceeds with the investment.it is in SMI’s interest as the new majority shareholder to consider all options to grow the value of Hyflux. Please refer to SMI’s presentation at the town hall session. https://www.hyflux.com/wp-content/uploads/2019/01/Town-hall-Meeting-presentation-for-Holders-of-Perpetual-Capital-Securities-and-Preference-Shares.pdf
*From the book value, it appears that Salim Group’s offer is very low. Can the offer be improved?
How much additional money is Salim prepared to put into Hyflux if the reorganisation is successful?
  1. SMI’s offer was initially lower.
  2. The investment agreement was the result of aggressive negotiations by the Board and advisors.
  3. The problems to be resolved within the Group require considerable financial resources as the liquidity crunch continues to lead to delays and cost overruns.
  4. SMI is optimistic that it can revitalise the business.
It was mentioned that Salim’s deal requires approval of NEA, PUB and EMA. Have they approved?
Why did PUB allow Indonesian to control Hyflux but forbid Hyflux to sell to many (other) parties?
Does SMI foresee any regulatory hurdles in acquiring Tuaspring (as a condition for the investment) given that it is a strategic national asset and investors need to be pre-cleared by the Singapore government?
Will Singapore government approve Salim group as investor?
  1. Approval from the relevant regulatory authorities is a condition precedent to SMI’s proposed investment.
  2. Prior to signing the restructuring agreement on 18 October 2018, SMI had obtained in-principle approval from the relevant regulatory authorities.
  3. SMI is presently in the process of obtaining approval from the relevant regulatory authorities.
  4. Neither Hyflux nor SMI can comment on the decision-making process behind the granting of such approvals by the relevant regulatory authorities.
Salim is taking over more than 60% of the shareholdings. It appears that they have to do a General Offer (GO). Would that complicate the restructuring?
  1. SMI will apply to the Securities Industry Council to seek a waiver of the requirement to make a General Offer.


*Why has the company not revised the book values of Tuaspring and your other assets earlier? Based on the news reports, the offer price for Tuaspring is way below book.
Why is the book value at 1.3 billion and yet market is willing to pay only around 500 million or less? Is there negligence by the board or auditors and the value was inflated?
*Why has the Tuaspring sales agreement with Maybank been extended every month when Salim has no intention to sell it?
Does SMI’s $530M equity injection mean that Hyflux is no longer exploring the separate sale of [Tuaspring]? Is the retention of [Tuaspring] a key condition for SMI coming in as a white knight? Why provision was not provided when Hyflux was unable to sell [Tuaspring]? If adequate provision was provided, Hyflux will not be able to pay out the last dividend
*The sale of Tuaspring is critical to securities & note holders getting a good deal. Is Hyflux still exploring the sale of Tuaspring?
The best case liquidation amount presented is only $100+million Vs an original asset price of only Tuaspring 900+ million without even considering other assets. How can this be correct?
The CFO revealed that before the moratorium, the negotiations are around the book value, and now it isn’t. Is it due to the voluntary moratorium? This has caused investors to lose money.
  1. The effort to divest Tuaspring started in January 2017.
  2. DBS and CICC Bank were appointed as advisors for the divestment exercise.
  3. By August 2017, more than 50 parties had indicated an interest in Tuaspring and had been provided access to the information memorandum concerning Tuaspring following written approval to disclosure being received from PUB. This information memorandum provided high level information on the asset.
  4. As a result of this exercise, the company received several preliminary non-binding bids, all of which were subject to agreement on the investment structure, regulatory and other approvals, and completion of detailed due diligence. Three of these indicative bids attributed an enterprise value of S$1.4 bn to the Tuaspring project. These came from a PRC SOE, a private UAE party and a subsidiary of a Singapore listed company.
  5. However, these numbers were not final but subject to various conditions, investment structures and further due diligence.
  6. To conduct further due diligence (which required obtaining access to more confidential information relating to Tuaspring) and to make a binding offer, an interested party needed to be approved by PUB to be granted access to such confidential information.
  7. By May 2018, none of these parties had completed their due diligence processes, and the time required to complete such due diligence and receive an offer was likely to take a much longer period of time. With the weak electricity market not likely to recover in the near term, the Group will continue to suffer losses. As such, Hyflux decided to commence a transparent financial reorganisation supervised by the High Court of the Republic of Singapore.
  8. The effort to divest Tuaspring continued in July 2018 through a collaborative sale process with the sole secured bank lender, Maybank.
  9. Of the parties that had expressed an interest previously, only 8 requested to be pre-qualified by PUB.
  10. Of the 8 parties, only 2 local parties were pre-qualified by PUB, of which 1 submitted a conditional bid in early October 2018.
  11. This conditional bid would have been insufficient to repay Maybank.
  12. Maybank agreed to extend the relevant deadlines for the collaborative sale process but to-date no further offer has been received from the other pre-qualified local party.
  13. No further request for pre-qualification has been made by any other interested party nor have any other offers been received.
  14. The Board is duty-bound to consider any offer that is made and compare that against the proposed investment by SMI.
  15. At present, the best option in all the circumstances, is the proposed investment by SMI. Before the scheme meeting on the proposed investment at the end of March 2019, the Board will consider any better offer that is received. To-date no other offers have been made.
  16. Please also refer to the SGX announcement issued by Hyflux on 28 January 2019 regarding the Tuaspring sale process and related news reports: http://investors.hyflux.com/newsroom/20190128_161822_600_P8YLNZWOKM8HC60B.1.pdf
*Without the sale of Tuaspring, how is Hyflux able to repay the loan to Maybank?
When will Tuaspring start making profits? At what electricity price per kwh will Tuaspring be profitable?
What is the long term plan for Tuaspring since it is still losing money? Even after restructuring it will still lose $50 million per annum. When will the take or pay gas contract end?
Has the opportunity cost of holding on to the asset for so long been considered?
  1. While the long term plan for Tuaspring is still being considered, the intention is to operate Tuaspring optimally and profitably while leveraging on the synergy between SMI and the Hyflux Group.
  2. SMI may also separately discuss with Maybank on a potential restructuring of Maybank’s project finance.


*Why did Hyflux issue $500m PCS in 2016 to retail investors when you were fully aware that Hyflux was already in serious trouble then? Why not offer right issue then?
With hardly 2 payouts on the perps, and Hyflux is now facing financial strains. Why did Hyflux then issue the perps at 6% to attract investors? They should have been (more) responsible and more forthcoming when perps were offered. Did SGX not know (of the company’s situation)?
  1. The $500 million perpetual capital securities raised in May 2016 were used for the repayment of: (i) the S$100 million in aggregate principal amount of 3.50% outstanding notes due 2016 issued under Hyflux’s S$1.5 billion multicurrency debt issuance programme (ii) the S$175 million in aggregate principal amount of 4.80% outstanding perpetual capital securities, whilst the remaining were used for general corporate purposes (including the repayment and/or refinancing of existing borrowings, redemption of outstanding perpetual capital securities, financing of working capital and/or capital expenditure requirements of Hyflux or the Group).
  2. Such use and purpose of the funds sought to be raised by the perpetual capital securities in 2016 were fully explained in the offer document.
  3. When the perpetual capital securities were raised in May 2016, the Tuaspring Power Plant had just commenced operations. It was not apparent then that the weak electricity prices would persist and the group would be adversely impacted by the cash needs of Tuaspring resulting from the prolonged weak electricity market in Singapore.
  4. The perpetual capital securities were raised one month after Hyflux was awarded a contract for an Integrated Water and Power Project in Egypt worth USD500 million.
  5. Hyflux had also posted a net profit of S$7.3 million for its FY2016 first quarter results on 12 May 2016, right before the offer for the perpetual capital securities was made.
  6. Group revenue for 1QFY2016 rose to S$248.3 million from S$60.4 million in 1QFY2015.
  7. A rights issue, by itself, would not have been sufficient to raise the same amount of funds.
*Why Hyflux was able to pay dividend when the company was already in difficulty?
  1. Prior to 2017, Hyflux had been recording net profits. Ordinary dividends paid out annually were reflective of the respective years’ profit achieved.
  2. It was only in 2017 that the Hyflux Group, for the first time, posted a net loss.
  3. Since 2017, no cash dividends have been declared for the ordinary shareholders.
*Hyflux 2017 financial statements were released in Mar 18 and 2 months later, it called for court protection. Why was there no indication of cash flow issues in Mar 18 and we needed EY to point it out?
How is it that the financials of a reputable company could deteriorate so drastically within 2-3 months? What were the measures of disclosure and financial oversight from Hyflux?
How did a single project drag Hyflux into this stage where almost all of the $2.9 billion unsecured holders and creditors will be wiped out if liquidated?
  1. Hyflux is in a capital intensive business where the business model is to invest in projects and then recycle capital through divestment of the project after a few years of operation. Hyflux has had a successful history in investing and divesting in accordance with this business model and asset light strategy.
  2. Tuaspring was the largest asset Hyflux has invested in. In line with the business model, Hyflux sought to divest Tuaspring about a year after the power plant started operations in March 2016. Unfortunately, at that time, the poor market conditions hindered the divestment efforts
  3. The oversupply of gas in the Singapore market resulted in depressed electricity prices which adversely impacted Tuaspring’s financial performance when it started operating. The average wholesale electricity price in 2016 (when Tuaspring power plant started operations) was at $63/MWh, compared ro $220/MWh in 2011 (when the project was first awarded to Hyflux).
  4. While the Group reported losses in 2017 for the first time in its history, it had also regularly kept the market abreast of its plans to divest the Tuaspring project as well as its discussions with potential strategic investors.
  5. When the 2017 losses were reported in February 2018, the resulting impact included the gradual tightening of credit support for the Group in May 2018. This exacerbated the liquidity position of the Group. In May 2018, the Board decided to file for court protection as the prospect of recovery in the power market in the near term was unlikely.
  6. Tuaspring’s negative performance had a knock-on effect on the Group’s overall cash position, resulting in the current liquidity crunch. This could not have been alleviated easily as there were also restrictions on the repatriation of monies into Singapore from completed overseas projects.
Preference share was due for redemption on 2018. Why was nothing done to raise money to ensure that the preference shares be redeemed? This partly resulted in drop of confidence from banks and investors.
Ms OL , Please be transparent, when we bought NCPS in year 2016 , Hyflux still have investment in China and Middle East etc. why you sell one by one foreign investment with heavy loss?
  1. Efforts to divest completed projects and assets to raise funds were underway since 2016. This included a divestment process for Tuaspring and a divestment process for Tianjin Dagang. Market conditions negatively impacted these divestment efforts.
  2. Hyflux did not sell any of its significant assets in 2016. The sale of Galaxy Newspring was announced in 2016 and completed in 2017. The sale of Galaxy Newspring resulted in a net gain of S$16.5 mil.

Management and Board

*Why is Olivia Lum not injecting capital into Hyflux? Why is she not taking any paycut like what other restructuring company did?
Olivia Lum and her BOD has to claw back their pay and stop their pay. Ezion founder lumped in 100 million own money … what has Olivia Lum done?
Nam Cheong chairman lumped in 30 million to help his company. What has Olivia Lum done?
ASL marine BOD pumped in 16 million to subscribe to their own rights. What has Olivia Lum done?
*To Olivia Lum, you said you now have zero share, what impact can you help your investors with the new management?
  1. The proposed investment is essentially a takeover by a strategic investor. In the above examples, funds were injected by the majority shareholders. Similarly, here, the equity injection is from the new majority shareholder, SMI.
  2. The scale of the Hyflux Group requires a significant injection of equity in order to effectively revitalise the business. Only a large strategic investor could feasibly effect a long term solution.
  3. Correspondingly, such a large investment by the strategic investor will result in Ms Lum losing almost all of her founding stake in Hyflux.
  4. Ms Lum will no longer be in control but she is prepared to continue to run the company in order to ensure the restructuring is successfully concluded and there is a smooth transition which would serve the interest of all stakeholders.
Is management prepared to sacrifice to ensure survival of company and what sacrifices are being made moving forward?
Why should we give 3% of new Hyflux to management when they are the one brought the company down?
We read from the news that the management will get 10% equity after restructuring. Can you clarify and explain why you deserve the 10% equity?
  1. The management has volunteered not to receive any management retention shares.
  2. Ms Lum and the management of Hyflux hopes that their decision reassures the stakeholders that they are aligned in seeking the best outcome for Hyflux and its stakeholders.
What are the legal liabilities of the current board on this business “failure”?
  1. The problems facing Hyflux were not triggered by any corporate governance failure but by losses from a weak electricity market and knock-on effects on the cash needs of Tuaspring, the Group’s largest asset. This resulted in the cash crunch for the Group.
  2. However, the Board is focused on achieving the best possible outcome for all stakeholders and remains committed to discharging this duty in these difficult circumstances.
  3. It is for this reason that the Board carefully considered all possible options and aggressively negotiated with potential investors to procure what it feels is the best possible deal in the circumstances.
To Olivia Lum, you said you now have zero share, what impact can you help your investors with the new management?
Olivia Lum, Mr Gerald has openly asked for you to step down as Chairman. Will you do so?
What will be Ms Lum’s role post-restructuring? Will she continue to lead the company? Will she have a stake in the outcome?
Just because you are not in the driving seat anymore Olivia Lum abandons the company?
  1. If the restructuring plan is accepted, Ms Lum’s shares in Hyflux will be diluted to almost zero. Her priority is to ensure a successful restructuring of Hyflux’s financial obligations so as to maximise returns for all stakeholders including the perpetual security holders and preference shareholders.
  2. Ms Lum is committed to stay with and run the company in order to ensure the restructuring is successfully concluded and there is a smooth transition which would serve the interest of all stakeholders.
  3. Ms Lum and the Board are open to appointing a new Chairman if this would best serve the interests of stakeholders and facilitate the ongoing reorganization process.


*How can we trust that EY is acting independently and that there are no conflict of interest because they are also the auditors of Salim and Medco listed companies. Will they be biased to their clients?
  1. The EY team advising Hyflux is distinct and separate from other EY teams and only acts in the best interests of Hyflux.
Hyfluxshop has to return the $20 million loan to Hyflux. What has Olivia Lum done?
  1. Prior to the spinoff, Hyflux extended parental support to Hyfluxshop over a number of years resulting in intercompany balances of approximately S$20 million. In consideration of this support, Hyfluxshop issued S$20 million preference shares to Hyflux which are due for redemption 4 years from 13 February 2018 (ie, 13 February 2022).
*Has Hyflux approached the government for help in view of the strategic asset? If yes, what was their response?
If Salim Group is so great, shouldn’t perps and pref holders get 100% of their investment back? Isn’t Temasek and GIC worth more than Salim GP? Why has the Singapore Government betrayed us to foreigners?
Water is strategic, if all options failed to prop up the cash flow for Hyflux’s survival n save PPS, BOD shud seek Govt intervention as we can now see the majority attendees are pretty much grey hair
Mr David Gerald had mentioned, water is strategic and precious to Singapore’s investment. Why did the government not put in a lending hand?
Ms Olivia Lum said in last meeting that reason for poor valuation of Tuaspring is because Singapore government gave instructions to prepare for 8 million population. Shouldn’t GIC/ Temasek do bailout of sorts?
Why does Hyflux not want government to bail out when it is in such a bad shape?
Since it was just mentioned that water is critical to our country, has the Government advised on how it is going to be moving forward?
Has Hyflux approach GIC or Temasek as investor(s)?
Can we demand Hyflux to be shut down so that Maybank loan of $700 mil can be written off? Then demand government to compensate the 34000 retail prep holders through the profit of running Tuaspring and other assets, if any.
Hyflux was following Singapore government’s instructions to prepare for 8 million population and industrial expansion. Can Singapore guarantee the debts of Hyflux and buy Hyflux via a GLC, sovereign wealth fund etc?
  1. Hyflux cannot speak for the government.
  2. The relevant government offtakers are aware of the situation as there are ongoing projects involving them.