A number of retail holders of Hyflux preference shares and perpetual securities (PnP) holding "substantial debt" are planning to block the Utico rescue deal, should a scheme be proposed on the current terms.
The Securities Investors Association (Singapore), or Sias, said in a letter to Hyflux yesterday that members of the informal steering committee (ISC) for PnP holders have sent e-mails "expressing their dissatisfaction" with the deal in its present form.
The investor advocacy group requested the troubled water-treatment firm to respond to the PnP ISC members' more pressing concerns on the Utico agreement, which it summarised in the letter. Sias also raised queries regarding the Aqua Munda deal.
The retail investors are doubtful about Middle Eastern utility firm Utico's ability to meet its financial obligations under the proposed scheme. This is especially so for those planning to choose the second option and believe they may not receive any payment.
"The timeframe for payment will be as far as four years from the date of the restructuring's effective date," Sias wrote. It added that there has been sparse financial information on Utico FZC and Utico Singapore, which are providing the guarantee or share pledge to PnP holders choosing the second option.
Sias also asked Hyflux to confirm whether group chief executive officer Olivia Lum will give up her entitlement in her position as a PnP holder, for the benefit of other holders under the Utico deal. Ms Lum had been "more than willing" to give up such entitlement under the now-scrapped Salim-Medco consortium rescue plan, Sias said.
In addition, PnP holders would like confirmation on whether the Hyflux board, including Ms Lum, would abstain from voting on the Utico deal to avoid any conflict of interest, the group noted.
Separately, there is a success fee of up to $25 million payable to Hyflux adviser nTan Corporate Advisory, helmed by principal Nicky Tan. PnP holders want a "full understanding" of this fee, or else they will vote against the Utico deal.
They requested Hyflux to reveal whether nTan had brought in Utico as an investor, whether Mr Tan negotiated with Utico for the restructuring agreement and helped PnP holders secure a better deal, whether he helped Hyflux reduce debt, and how the $25 million figure was arrived at.
Sias itself also expressed concern about the adviser fees, as it believes the advisers should be reimbursed for their work done and the "significant" amount of time they have had to spend addressing investors' concerns.
Drew & Napier and PricewaterhouseCoopers Advisory Services are the appointed advisers for Sias, which, in turn, represents the PnP ISC. Meanwhile, Akin Gump Strauss Hauer & Feld, BlackOak and FTI Consulting were appointed by Sias to represent the ISC for the holders of the medium-term notes.
In relation to new investor Aqua Munda, Sias requested Hyflux to help relay the following queries to the Singapore-incorporated firm.
The group is asking for the identities of the principals behind Aqua Munda and its intention with respect to the restructuring.
It also wants to know how Aqua Munda intends to fund the acquisition of the offer made to the senior creditors and, if an offer is made to the PnP holders, how it intends to fund that acquisition as well.
Sias added that it "strongly encourages" Aqua Munda to open any invitation to the PnP holders as soon as possible and before the scheme meeting is convened.
This is so as to allow the PnP holders a fair and reasonable opportunity to consider both Utico's and Aqua Munda's offers, it said.
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