SINGAPORE (THE BUSINESS TIMES) - The Securities Investors Association Singapore (Sias) has called on Hyflux to immediately clarify key aspects of Utico's revised rescue deal, which the investor watchdog dubbed a "bombshell" for holders of Hyflux's perpetual securities and preference shares (PnPs).
In a statement on Thursday, Sias chief executive David Gerald noted that Utico's latest offer to the PnPs is that their holders will receive shares comprising 5 per cent of Utico and 12.5 per cent of Hyflux as payment, but with no cash component. This offer is valid only until June 4.
Under Utico's original $400 million rescue package for Hyflux, PnP holders would have received an upfront cash payment of $1,500 or 50 per cent of their holdings, whichever is lower. But in a letter to Hyflux on Tuesday, Utico chief executive Richard Menezes said that all cash considerations his firm had earlier offered will be substituted for stock in Utico and Hyflux.
"This must come as a shock to PnPs, who were expecting to recover 50 per cent of their initial investment in cash under the initial proposal," Mr Gerald said.
Given the tight deadline for Utico's new offer, he called on Hyflux to promptly seek clarity on the name of the Utico entity whose shares are to be issued to the PnPs.
Hyflux should also question whether, similar to the previous offer, the PnPs can choose between an upfront option and a deferred option, under which shares will be issued over a period of time, Mr Gerald said.
If PnP holders do have this choice, Hyflux should further clarify what the offer for each option entails, and if it includes a deferred distribution, whether security will be provided for such distribution, he added.
Utico's revised offer stems from the lapsing of the long-stop date of May 26 for its original offer. This deadline was passed without court sanction being obtained for the proposed restructuring schemes, Mr Gerald noted. In addition, Utico claims that its request for KPMG's report on Hyflux's financials was met only on May 26, instead of Jan 27.
Mr Gerald said in his statement: "Sias is disappointed that it has now come to pass that, despite Sias' reminders, the long-stop date has now lapsed and Utico's revised offer as set out in its May 26 letter is considerably less favourable than Utico's earlier offer."
He said Sias had requested Hyflux to work on extending the long-stop date since Singapore began introducing measures to deal with the Covid-19 pandemic.
Sias had also reached out to Hyflux on multiple occasions in April and May to seek updates on whether Hyflux and Utico had reached an agreement to extend the long-stop date, what Hyflux's plans were if the deadline could not be extended, and when and how scheme meetings were to be convened, Mr Gerald said.
He also called on the firm to update its stakeholders on developments regarding Utico or other potential white knights, rather than to leave them "in a state of uncertainty".
"Hyflux is still a listed company on SGX and it is the duty of the company and its directors to provide timely and transparent updates to its stakeholders, notwithstanding the challenges faced.
"This restructuring commenced nearly two years ago and, to date, is nowhere near conclusion. Sias strongly urges that Hyflux take all steps possible to bring the restructuring to a satisfactory and expeditious end for all stakeholders."
Hyflux is under court protection from creditors until July 30.