Some of its 34,000 retail investors could lose up to 90 per cent, with the firm’s collapse marking the 15th credit-market shock in the last four years.
“Due to the large number of holders of the securities who have indicated that they wish to attend, the company considers it necessary to arrange for a larger venue”, Hyflux said. It promised an alternative event would be arranged.
“The company will announce the date, time and venue of the rescheduled town hall meeting as soon as possible,” the firm said.
A creditors’ vote between restructuring and liquidation on April 5, led retail investors to file proofs for a share of the S$3.51 billion in claims being made against Hyflux.
Hyflux has around 34,000 retail investors who largely believed the firm had heavy government approval.
The Hyflux collapse is associated with Tuaspring (pictured). The desalination and power station cost around S$1.1 billion (US$809 million) and was hailed as a “national tap” for the crowded island that is dependent on imported water and harvested rainwater. The company encouraged investors to cover S$900 million of junior debt to help fund the venture and group expansion.
Tuaspring opened in September 2013 with Prime Minister Lee Hsien Loong calling it “the latest milestone in Singapore’s water journey” while praising its “unique and cost-efficient design”.
However, the plant has failed to create a profit and it began selling excess capacity in 2016 to the power grid as the opening of the market to competition caused a surplus. Liabilities have approached S$2.7 billion and Hyflux looked for court protection from creditors to restructure.
The Singaporean government has rejected calls for intervention in a “commercial matter”.
Hyflux was given 30 days to recover its obligations or the authorities could terminate the contract and seize Tuaspring.
The government deadline for Tuaspring to meet its demands is April 5 and before then creditors must vote on Hyflux’s restructuring plan, accepting the deal or risk losing their investment.
“This adds to the urgency and pressure on Hyflux and its creditors to pass the restructuring plan,” said Ang Chung Yuh, an analyst at iFast. “They are stuck between a rock and a hard place.”
Hyflux junior securities holders could lose as much as 90 per cent of their capital in the restructuring proposal, under which Indonesia’s Salim Group and energy company Medco would gain a 60-per-cent stake in exchange for an S$530-million cash injection. Banks and senior bondholders are projected to lose about 75 per cent.
Hyflux last week said it would alter its repayment plan to help retail investors and its employees would receive a reduced incentive plan.
The Hyflux crisis is the latest in at least 15 corporate defaults since 2014.
“This episode is really a wake-up call for the Singapore financial sector, how we promote such novel and risky instruments, the role of financial intermediaries and the education of the investing public,” said Lawrence Loh of NUS Business School in Singapore.
Tuaspring under construction. Picture credit: Vimeo