Sias calls for Hyflux directors to step down

Investor group's president flags directors' poor credibility, lack of success in restructuring

The Securities Investors Association (Singapore), or Sias, is calling for the directors of embattled water treatment firm Hyflux to step down.

"Directors must go because of poor credibility... They have taken too long and haven't displayed the ability to close a deal," said Sias president David Gerald yesterday.

A number of holders of perpetual securities and preference shares (PNP) have expressed their concerns about the current situation at Hyflux, he noted.

The company, as well as its current and former directors, are currently under criminal investigation by the Singapore Police Force's Commercial Affairs Department, the Accounting and Corporate Regulatory Authority and the Monetary Authority of Singapore over corporate governance lapses, which include non-compliance with accounting standards.

Mr Gerald said: "Where directors are under investigation for serious offences, they must ask themselves whether they should step aside and allow new directors, especially independent directors with expertise and fresh (minds), to deal with new offers."

Directors involved in the probe include Hyflux's executive chairman Olivia Lum and lead independent director Teo Kiang Kok.

Hyflux has about 50,000 shareholders, bondholders, perpetual securities holders and preference shareholders, and its liabilities stood at $2.95 billion as at March 31, 2018. It filed for bankruptcy protection and suspended shares trading in May 2018.

Around 34,000 retail PNP shareholders are owed about $900 million in total.

Mr Gerald highlighted that in the two years since Hyflux filed for bankruptcy protection, it has not succeeded in restructuring the company, with rescue offers from white knights having fallen through.

Sias is disappointed that the company's board has on numerous occasions failed to respond to questions that the association has raised on behalf of retail investors, Mr Gerald said.

The association previously called on Hyflux to update its stakeholders on developments regarding Utico or other potential white knights, instead of leaving them "in a state of uncertainty", and for the company to organise a town hall session for investors to better understand and respond to investors' concerns and queries.

Mr Gerald said investors have asked if Sias would help initiate legal action against Hyflux's directors, but the association has advised those exploring legal action to seek their own legal counsel or wait for the right time that would warrant such an action, as such an initiative now would affect any restructuring plans.

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A version of this article appeared in the print edition of The Straits Times on June 04, 2020, with the headline Sias calls for Hyflux directors to step down. Subscribe