Forum: Hoping for Hyflux deal with some form of recovery for all parties

It's been a very long wait for the thousands, in fact, 34,000 preference shares and perpetual securities (P&P), and bond holders of Hyflux to see light at the end of the tunnel. It has been some 2½  years since Hyflux filed for protection in the Singapore courts. It has now been placed under judicial management.

While some creditors have welcomed the court's decision because they are tired of waiting for Hyflux to find a suitable white knight, many retail investors fear the worst - liquidation. One can't blame them as judicial management often leads to liquidation, leaving the subordinated creditors completely out of money.

The senior creditors or the unsecured working group (UWG), who were advised by financial advisers Borrelli Walsh, had previously stated in a letter on Oct 15 last year, that they would accept only an offer of 12.5 cents from any investor to continue to support the restructuring. Such a demand would leave other creditors, particularly the P&P holders who are subordinated, with little or no return. It is the hope of the Securities Investors Association (Singapore) or SIAS that a white knight can be found who will satisfy the senior creditors and also allow the P&P holders some returns.

I have seen the tears and the heartache of the small investors, who have ploughed their savings into Hyflux. A large number are retirees. Now, they look to the court-appointed judicial managers to carry out the restructuring and provide them with some returns. It is the last straw they are hanging on to.

A fund has shown keen interest in taking over Hyflux and has provided a conditional and non-binding offer to all classes of Hyflux investors. Time is of the essence and we urge the judicial managers to secure a binding offer from this offeror urgently.

In the meantime, some creditors are considering taking legal action against the board. However, that must be considered a separate matter subject to obtaining independent legal opinion. Commencing legal action against the board will likely be costly and long drawn-out, and creditors should be prepared to incur significant time and resources in pursuing and maintaining such action.

Investigations against the board are ongoing and if these investigations show cause to pursue an action against Hyflux's board, SIAS will put its weight behind such an action. SIAS hopes that the judicial managers will consider the plight of the P&P holders and act in the interests of all creditors.

We are hoping for a deal that includes some form of recovery for all parties, to be reached for the sake of the thousands of distressed small investors.

David Gerald

President

Securities Investors Association (Singapore)