Investments gone bad

[LITTLEREDDOT]

Vivian Balakrishnan

 

[LITTLEREDDOT]

 

[LITTLEREDDOT]

 

[LITTLEREDDOT]

Lee Hsien Loong

 

[k1976]

Lao Hero Still around?

 

[LITTLEREDDOT]

Hyflux got only $150 million bank loan for $890 million project because of cash flow concerns​

The prosecution’s third witness, Mr Nah Tien Liang, Hyflux’s former vice-president of investment, outside the State Courts on Sept 2.

Summary

• Hyflux wanted a term loan of $527 million for its Tuaspring project, but concerns over the power plant led to lower offers from banks.
• Hyflux had to provide a $252 million base equity for a $150 million loan.
• Hyflux's collapse, funded by preference shares instead of bank loans, left 34,000 investors with $900 million in losses due to weak electricity sales.

AI generated

Sep 02, 2025

SINGAPORE – Even after Hyflux won its bid for the $890 million Tuaspring project in March 2011, it managed to secure only a $150 million bank loan.

This was because the banks estimated that cash flows from the desalination plant would support only around $150 million to $170 million of debt, a court heard on Sept 2.

To finance Tuaspring, Hyflux had sought a term loan of about $527 million from a consortium of banks. In October 2010, six banks signed in-principle commitment letters indicating their willingness to lend the money.

But they raised “serious concerns” after learning of Hyflux’s plan to build a power plant and sell excess electricity to the grid. In January 2011, they told Hyflux that they could not lend money on the terms previously indicated as the power plant introduced new “merchant sale risk and operational risk”.

“The banks were saying: ‘Without the benefit of due diligence or extensive financial modelling, we estimate that the cash flows generated under (Hyflux’s) water purchase agreement may be able to support around $150 million to $170 million of debt,’” noted Deputy Public Prosecutor Kevin Yong on Day 8 of the criminal trial.

“Therefore, the rest of Tuaspring’s project cost has to come from an additional base equity commitment from Hyflux.”

“That’s the worst-case scenario,” the prosecution’s third witness, Mr Nah Tien Liang, told the court. Mr Nah was Hyflux’s former vice-president of investment. Part of his testimony was heard earlier in private.

The banks were concerned because Hyflux had no track record in operating a power plant. They also had misgivings about the tech capabilities of Shanghai Electric, a sub-contractor which was being considered to build the power plant, as well as fuel price risks, and a new termination clause introduced by PUB.

Singapore’s national water agency wanted the option to take over only the desalination plant, without the power plant, in the event of termination.


This was because “the original tender called only for the desalination plant. There was no power plant”, Mr Nah said.

‘Need to do a lot of convincing’: Lum​

In a Dec 4, 2010, e-mail, Hyflux founder Olivia Lum had told several senior management officers: “Need to do a lot of convincing job in energy strategy to the banks.”

She had also noted that Island Power, another power plant under construction at the time, was having a “financing challenge”.

When asked what Island Power’s financing challenge had to do with Tuaspring, Mr Nah replied that both were power plants.

“Whatever concerns the lenders had on the power market would also apply to the lenders of Tuaspring and Island Power,” he said.

In the end, only three of the original six banks – DBS Bank, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation – extended financing of $150 million for the construction of the desalination plant.


Hyflux had to promise to provide a base equity of $252 million to the Tuaspring project for the loan.

This condition was set out in a July 4, 2011, deed between Tuaspring Pte Ltd, Hyflux and DBS. The parties had to commit to the deed before the banks would make advances under the loan.

DPP Yong asked why Hyflux needed to provide a base equity of $252 million for a $150 million loan.

Mr Nah responded: “Because if you want to complete the desalination plant, the construction... costs more than the $150 million the banks are providing. Therefore, the remaining has to be funded by equity.”

The court heard that Hyflux had confirmed in a Jan 7, 2011, letter to PUB that should it be successful in its bid for Tuaspring, it was willing to commit an equity injection of $363 million.

In this letter, Hyflux listed various sources of funding. This included “cash at hand of $307 million as of Sept 30, 2010”, as well as increased debt financing from project finance, cash from operations and a new issue of medium-term notes.

The $150 million financing was eventually terminated by Hyflux.

Tuaspring was ultimately financed by a shareholder’s loan of $840.4 million in October 2011. This loan, in turn, was refinanced with Maybank Singapore and Maybank Kim Eng Securities in September 2013.

In an Oct 31, 2011, announcement to the Singapore Exchange, Hyflux said: “In view of internal resources and funds raised from issuance of perpetual preference shares and medium-term notes, Tuaspring will rely on corporate funding to complete the development and construction of the Tuaspring desalination plant and power plant installed on site.”

Hyflux eventually issued preference shares to fund the integrated water and power project. The company’s collapse, due to weak electricity sales, left about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing.

When asked by DPP Yong if perpetual preference shares refer to the April 2011 preference share issue, Mr Nah agreed.

Lum, Hyflux’s former chief financial officer, Cho Wee Peng, and four independent directors – Teo Kiang Kok, Christopher Murugasu, Gay Chee Cheong and Lee Joo Hai – are contesting several charges. These relate to non-disclosures of material information about the Tuaspring project in a regulatory announcement in March 2011 and in the information document for the issuance of preference shares in April 2011.

 

[LITTLEREDDOT]

Prosecution, defence spar over request for evidence on how banks reacted to Hyflux power strategy​

Hyflux building in Kallang Bahru in 2020. The prosecution and defence had a war of words in the Hyflux criminal trial on Sept 3.

Sep 03, 2025

SINGAPORE - A war of words erupted between the prosecution and defence in the Hyflux criminal trial on Sept 3, following a surprise request by Senior Counsel Davinder Singh for correspondence between Hyflux and all the banks it had asked for financing.

Mr Singh, who is representing Hyflux founder Olivia Lum, had sought evidence on whether Maybank and other banks had issues with Hyflux’s power strategy when they considered financing the Tuaspring project.

Tuaspring was ultimately financed by a shareholder’s loan of $840.4 million in October 2011. The loan, in turn, was refinanced with Maybank Singapore and Maybank Kim Eng Securities in September 2013.

The prosecution had alleged that Hyflux “had motive” to downplay material information because it knew that the six original banks from which it had sought $527 million in financing had concerns about its power strategy.

It was referring to information about the Tuaspring project’s electricity sales component in a March 2011 announcement, as well as in the offer information statement (OIS) for the issuance of preference shares in April 2011.

Mr Singh had challenged these allegations.

Lum, Hyflux’s former chief financial officer, Cho Wee Peng, and four independent directors – Teo Kiang Kok, Christopher Murugasu, Gay Chee Cheong and Lee Joo Hai – are contesting charges relating to non-disclosures of material information about the project in the March 2011 announcement and the April 2011 preference shares issue.

According to the prosecution, six banks had signed in-principle commitment letters indicating their willingness to lend, but raised “serious concerns” after they learnt of Hyflux’s plan to build a power plant and sell excess electricity to the grid. In January 2011, Hyflux was told that they could not lend money on the terms previously indicated, as the power plant introduced new “merchant sale risk and operational risk”.

In the end, Hyflux only managed to secure a $150 million bank loan. This was because the banks estimated that cash flows from the desalination plant would support only around $150 million to $170 million of debt.

But the prosecution’s third witness, Mr Nah Tien Liang, told the court in his cross-examination that the $150 million financing was “very likely” meant “to meet the financial close deadline set by PUB”. Mr Nah was Hyflux’s former vice-president of investment.

After the $150 million was offered, the banks were still continuing to look at financing for the entire project, including the power plant, Mr Singh said.

This came after a spat between Mr Singh and Deputy Chief Prosecutor Christopher Ong, when Mr Singh asked for communications between Hyflux and all the banks.

“The prosecution considers it relevant to its case to set out how the six banks reacted. But they are refusing to let us have the exchanges between Hyflux, Maybank and the other banks,” Mr Singh said.

Mr Ong said he was not expecting the defence to bring this up.

Mr Singh said he requested this information because the prosecution had asked Mr Nah about “the financing arrangements and the impression that the banks were reluctant, and Hyflux was having difficulty raising funds”.


District Judge Toh Han Li pointed out: “But Maybank gave a loan of $720 million. So factually, some banks have reservations, and Maybank gave a loan.”

Mr Singh argued: “You can’t just pick a few letters from the banks to say there were concerns without showing whether there were any remaining concerns after due diligence was done.

“Maybank lent much later, but Hyflux was talking to Maybank and other banks.”

But Mr Ong countered: “In no way was (the) prosecution being selective. This is clearly in the context of what led to the March 2011 announcement coming out the way it did.”

It was these six banks that gave the in-principle commitment letter that Hyflux submitted to PUB for its bid, and “supported Hyflux in whatever way they are willing to”, he said.

“So these are the relevant banks,” he added.

During the hearing, Mr Singh took Mr Nah through a June 17, 2011 letter from Hyflux to PUB that showed that it was proposed that financing of the project be structured in two phases.

When asked about the link between the $150 million and the financial close deadline, Mr Nah said: “Based on a requirement that X months after signing, there is a financial close where there has to be financing to show PUB that there are funds for the project.”

He acknowledged that there was an approaching deadline for submission of financing from early-2011 to mid-2011 under PUB’s terms, and that Hyflux was also in discussions with other banks apart from the six banks in January and February of 2011.

Mr Singh said: “I suggest to you that the six banks in January 2011 said they needed more time, and that’s not unusual at all. They were prepared to submit a letter to Hyflux to be passed on to PUB, but as the banks were still assessing Hyflux’s requested financing, and the deadline for (submission of financing) was coming up, Hyflux couldn’t just sit and wait for the six banks, it had to do something.

“And one of the things it did was to have PUB agree to the $150 million financing first, and, in the meantime, continue to talk to the six banks and other banks. Ultimately, financing was obtained.”

In trying to debunk the prosecution’s case that Hyflux senior management downplayed the fact that the power plant would sell electricity to the grid and that Tuaspring’s profitability depended on these electricity sales, Mr Singh argued that it would not be possible for Hyflux to deliver desalinated water to PUB without the power plant.

“In fact, the power plant and the desalination plant were like conjoined twins. And it was fundamental and inherent to the entire model that was presented to the PUB?” he asked.

Mr Nah agreed.

The prosecution’s case is that Tuaspring was pitched as a desalination plant to investors, and the power plant’s main purpose was to supply electricity to the desalination plant, when in fact nearly 92 per cent of power produced by the plant was projected to be sold to the national grid and only 3 per cent was meant for powering the desalination plant.

Because Tuaspring’s revenue was a big component of the group’s strategy, its failure due to weak electricity sales led to Hyflux’s collapse.

“If you had a power plant like Tuaspring where you were going to sell excess power to the electricity grid, your exposure lies in the event of electricity prices going down, right?” Mr Singh asked.

Mr Nah replied: “It is more if the spark spread reduces, and if the electricity price also drops, that would impact the power plant financially.”

Spark spread refers to the difference between selling price of electricity and the short-run marginal costs of fuel, or the costs of production using gas.

In the afternoon of the hearing, Mr Nah’s evidence was given in camera, with the public and media not allowed in, as it touched on issues of national security involving Singapore’s water security.

 

[LITTLEREDDOT]

Analysts upgraded Hyflux’s ratings despite its power strategy: Defence​

Ms Winnifred Heap, who used to head corporate communications and investor relations at Hyflux, was the prosecution’s second witness on Sept 10.

Sep 10, 2025

SINGAPORE – By scrutinising the March 2011 project announcement for the Tuaspring desalination plant, financial analysts would be able to work out that Hyflux would need to sell a large part of excess power generated to the grid to meet profit targets.

Nonetheless, most analysts maintained or upgraded their outlook on Hyflux’s share price based on bullish financial projections, which were published in reports that investors could access.

On Sept 10, these reports formed a key plank of the defence’s case in the criminal trial involving ex-Hyflux chief executive Olivia Lum.

She is facing charges of non-disclosure of material information in the March 2011 announcement, as well as in the issue of preference shares the following month.

To illustrate his point, Senior Counsel Davinder Singh drew on five research reports from DBS, Kim Eng, Credit Suisse, JP Morgan and Indian financial services company IIFL, all released within days of the announcement.

He was continuing his cross-examination of the prosecution’s second witness, Ms Winnifred Heap, who used to head corporate communications and investor relations at the defunct water treatment provider. Before joining Hyflux in 2009, Ms Heap was formerly head of Singapore research at JP Morgan.

He began by asking Ms Heap what information an analyst covering Hyflux would need to determine the excess electricity capacity of a plant like Tuaspring, and to project the impact of the sale of electricity on both revenues and profits.

“The math can only be done if you consult a water desalination specialist who can tell you the typical (electricity) consumption of such a plant,” Ms Heap said.

However, in response to a follow-up question from Mr Singh, she acknowledged that consulting such an expert is not required if the information is publicly available.

Assumptions on the potential demand, supply and resulting price of electricity would also be required for the analysis, she noted.

Afterwards, Mr Singh asked her the extent of industry knowledge an analyst covering Hyflux could be expected to have, as well as the role of an analyst in investment research.

“How do analysts compete with each other? In other words, if I were an analyst in Company A and there’s another analyst in Company B both covering Hyflux, what gives us the competitive edge?” he asked.

To this, Ms Heap said key to this is the ability to “scrub the financials” to understand the visibility and certainty of cash flow, as well as verifying technical details with industry experts for the analysis.

Mr Singh then cited the report from IIFL, in which an analyst estimated that Hyflux would have to sell at least 65 per cent of the excess power not used in desalination to achieve a “low-teen” equity internal rate of return of between 10 per cent to 14 per cent.

The internal rate of return is a key measure of profitability.

The IIFL analyst raised the target price for Hyflux from $1.60 to $1.79, but maintained a “Sell” recommendation due to concerns over Hyflux’s future order book, in a report targeting institutional investors.

The target price is the estimated value of a given stock for optimal returns.

The other four analysts had cited the Tuaspring order win as the basis for maintaining or improving their calls - which ranged from “Outperform” to “Buy” - despite a large order in Libya remaining in limbo.

Asked if the name of the IIFL analyst - who had called Ms Heap and whom she had sent an e-mail about to Lum and former chief financial officer Cho Wee Peng - rang a bell, Ms Heap said the company and analyst’s names were both unfamiliar, and not known to cover Hyflux regularly.

She also could not recall if the analyst had been invited for a briefing on the Tuaspring project.

Mr Singh said: “Despite them not being one of (the analysts) you see regularly… they were able to come out with the report (the) same day.”

Mr Thong Chee Kun from Rajah & Tann, who represents former chief financial officer Cho, cross-examined Ms Heap afterwards.

Mr David Chan from Shook Lin & Bok, who represents the remaining four independent directors, will conduct his cross-examination on Sept 10 afternoon.

After this, the prosecution will do a brief re-examination of Ms Heap.

The hearing continues.

 

[LITTLEREDDOT]

Ex-Hyflux deputy CEO Sam Ong not aware of ‘magnitude of losses and profits’ of Tuaspring project​

On Day 18 of the criminal trial on Sept 22, Mr Ong told the court that the desalination plant can be subsidised as “the power tariff is, quantum-wise, higher than the water tariff”.

Sep 22, 2025

SINGAPORE – Former Hyflux deputy chief executive Sam Ong Eng Keang was aware that the water treatment firm was going into the business of selling electricity in the Tuaspring project, but maintained that he was not aware of the “magnitude of losses and profits”.

Mr Ong – the eighth prosecution witness to take the stand in the criminal trial of Hyflux founder and former chief executive Olivia Lum, former chief financial officer Cho Wee Peng and four independent directors – was asked by both the prosecution and the defence about his understanding of how revenue generated from the power plant could subsidise the desalination plant.

On Day 18 of the criminal trial on Sept 22, Mr Ong told the court that the desalination plant could be subsidised as “the power tariff is, quantum-wise, higher than the water tariff”.

When asked by Deputy Chief Prosecutor (DCP) Christopher Ong to explain his answer fully, Mr Ong said: “As an integrated project, it would be viable.”

When asked the same question in his cross-examination by Lum’s lawyer, Senior Counsel Davinder Singh, Mr Ong said that “subsidising could mean subsidising profits or optimising of cost savings”.

Mr Singh said: “Therefore, it is clear from these words that revenue and profits from power would subsidise the cost of desalinated water?”

Mr Ong replied: “Correct, but I don’t know the extent of it.”

While Mr Ong agreed that the financial model is such that revenue and profit from electricity sales would be used to subsidise the water tariff from the desalination plant, he said he did not have “details of the model and how, over a 25-year life cycle, (inflationary) adjustments will impact the subsidy”.

Hyflux’s wholly owned subsidiary, Tuaspring, signed a 25-year water purchase agreement with national water agency PUB in 2011 to supply 70 million gallons, or 318,500 cubic m, of desalinated water daily from 2013 to 2038.

“I am not part of the task force for this project. My focus was on the Middle East and North Africa (Mena) region,” Mr Ong said.

Mr Ong joined Hyflux in 2006 as its chief investment officer, and had served in various capacities, including as chief financial officer and deputy CEO. In his role as deputy CEO, he was tasked with managing the Mena region, which accounted for 80 per cent of the company’s business at one point.

He told the court that Tuaspring was “an important project as it would enable Hyflux to diversify away from the Middle East and North Africa market to 50 per cent from 80 per cent”.

When asked by the prosecution why the task force was set up to handle Tuaspring, Mr Ong said it was a “monumental project that was close to $1 billion in project size. For confidential purposes, only a limited number of people were assigned to the task force”.

DCP Ong asked: “You were not aware of the extent and significance of electricity sales to the project? As deputy CEO, someone in your position was not aware of the particulars of this project?”

Mr Ong replied: “That’s how the company works... It’s accepted by all parties that the deputy CEO helps with projects outside Singapore, not with the Tuaspring project.”


When asked about Lum’s management style, Mr Ong described her as “a very tough boss, who demanded a lot from the team”. “She is intellectually and emotionally involved in all aspects of the company. This is her baby,” he said.

When asked about his dealings with Cho, Mr Ong, who had been finance director with Dow Chemical Company before joining Hyflux, said he “was my able and capable right-hand person, and succeeded me as chief investment officer, and most of my roles in Dow Chemical”.

Mr Ong added that Cho joined Hyflux after him, and that he was the one who hired Cho from Dow Chemical.

Lum, Cho and four independent directors are contesting charges relating to non-disclosure of material information about the Tuaspring project’s electricity sales component in a March 2011 announcement and an April 2011 preference shares issue.

The prosecution’s case is that Tuaspring was pitched as a desalination plant to investors, and the power plant’s main purpose was to supply electricity to the desalination plant, when in fact nearly 92 per cent of power produced by the plant was projected to be sold to the national grid and only 3 per cent was meant for powering the desalination plant.

Because Tuaspring’s revenue was a big component of the group’s strategy, its failure due to weak electricity sales led to Hyflux’s collapse.

When asked by DCP Ong if he had any concerns about Hyflux’s power strategy, Mr Ong said he did not have enough details “to have concerns”.

“But I did mention to Olivia that we have to make sure that we look at earnings, and the multiple of earnings.”

By that, Mr Ong said he meant looking at earnings “in terms of quantum and multiple of earnings for the valuation of the company... and maximising shareholders’ value”.

When asked why the selling of electricity necessitated looking at the multiple of earnings, Mr Ong said: “Based on my understanding, electricity sales earnings are different from water technology earnings in how they are rewarded in the marketplace.

“Hyflux’s earnings are 20 times multiple and the power plant company’s earnings are 10 times multiple,” he added.

“So the power aspect is valued less than the water technology aspect?” DCP Ong asked.

Mr Ong replied: “That’s based on my observation, at the time, of the SGX (Singapore Exchange).”

The defence also took Mr Ong through the minutes of risk management meetings from May 4, 2010, to Jan 21, 2011, as well as a Feb 22, 2011, board meeting, and asked if the attendees knew that former Hyflux legal head Yang Ai Chian and former corporate secretary Lim Poh Fong attended those meetings.

When asked why they attended, Mr Ong said it was to “ensure that risk issues were reflected in the records”, and discussions about risks were meant to be done openly in the presence of the company’s senior management and legal staff.

The hearing continues on Sept 24.

 

[LITTLEREDDOT]

Former deputy CEO of Hyflux said company not perceived as utilities firm before bid for Tuaspring​

Mr Sam Ong Eng Keang said there was nothing in the company’s business that would point to it being a utilities firm prior to the successful bid.

Sep 24, 2025

SINGAPORE - The former deputy chief executive of Hyflux said investors had perceived the firm as a growth company before it won the bid for the Tuaspring project in 2011, and not a water utilities firm.

Mr Sam Ong Eng Keang, who on Sept 24 was testifying in the ongoing criminal trial involving senior managers at Hyflux, said there was nothing in the company’s business that would point to it being a utilities firm prior to the successful bid.

Hyflux was named the preferred bidder for the integrated power and desalination plant in March 2011. The tender for the project closed in October 2010.

Mr Ong, who is the eighth prosecution witness to take the stand in the criminal trial of Hyflux founder Olivia Lum, former chief financial officer Cho Wee Peng and four independent directors, was responding to questions by Deputy Chief Prosecutor (DCP) Christopher Ong.

DCP Ong had asked Mr Ong, who joined Hyflux in 2006 as its chief investment officer and had also served as chief financial officer and deputy CEO, to clarify whether the implications of Hyflux being perceived as a utilities firm were raised in risk management committee meetings before Jan 21, 2011.

The implications were raised in earlier proceedings by Senior Counsel Davinder Singh, who is representing Lum.

Mr Singh noted that Cho and Hyflux’s then head of corporate communications and investor relations, Ms Winnifred Heap, had urged those present at meetings in May 2010 and Jan 21, 2011, to think about how Hyflux could portray itself as a growth company.

They said if Hyflux was seen as a utilities firm, it could have lower market valuations.

Mr Singh said that those remarks were made when Hyflux had reason to believe in the validity and viability of its own projections of sale of electricity.

Hyflux had intended to subsidise the cost of desalination with profits from power generation.

During the hearing on Sept 24, DCP Ong also asked Mr Ong why Cho was running the Tuaspring project before January 2011 when the accused was then the firm’s chief investment officer.

DCP Ong noted that this was prior to Cho replacing Mr Ong as the company’s chief financial officer.

In response, Mr Ong said it was because of the way Hyflux designed its succession planning.

He added that Cho did not report to him on the Tuaspring bid.

Mr Ong said that he was not part of the task force for that project, adding that Cho instead reported to Lum, who was the project lead.


Ms Michelle Lee, who is representing Cho, separately sought clarity from Mr Ong on his earlier testimony regarding the issue of compliance at the company.

In earlier proceedings, Mr Ong had said that the role played by Ms Peggy Lim, the former head of compliance and secretariat, was not filled after Ms Lim left Hyflux in 2010.

Mr Ong said the compliance role was not replaced, but Ms Lim Poh Fong did take over the secretarial role.

Ms Lee pointed out that it was not the case that the company did not have anyone to oversee compliance.

Mr Ong agreed that this was done by the firm’s legal team, including Ms Lim and Ms Yang Ai Chian, who was legal head.

The hearing continues on Sept 30.

 

[LITTLEREDDOT]

GIC asks to pull some cash from fund with large exposure to bankrupt First Brands: Sources​

GIC asked to pull some cash from a Jefferies Financial Group fund with large exposure to bankrupt First Brands Group, according to sources.

Oct 16, 2025

NEW YORK - Singapore’s sovereign wealth fund GIC asked to pull some cash from a Jefferies Financial Group fund with large exposure to bankrupt First Brands Group, according to sources familiar with the matter.

GIC has been in talks to redeem some of its funds invested with Point Bonita Capital in recent weeks, said the sources. Point Bonita, a unit of Jefferies’ Leucadia Asset Management, had about a quarter of its US$3 billion(S$3.9 billion) trade-finance portfolio invested in First Brands-related receivables.

Spokespeople for GIC and Jefferies declined to comment.

Late on Oct 12, Jefferies said in a statement that following the discovery of the issues at First Brands, Leucadia communicated directly with Point Bonita fund investors and agreed it made sense for them to submit redemption requests to give them maximum flexibility as the fund worked through the circumstances.

Redemption requests become effective on Dec 31, Jefferies said. That will lead to four quarterly, pro rata redemption payments, with the last one due in October 2026, the statement said.

Jefferies, which advised First Brands for more than a decade as it raised debt in the private credit market, also defended its dealings with the auto-parts supplier, saying that the bank was not aware of any fraudulent activity and that its exposure to the company was small.

The collapse in recent weeks of auto parts supplier First Brands and subprime auto lender Tricolor Holdings has raised fears of stress in the private credit market.

First Brands filed for bankruptcy in late September after the company used private credit to run up debt of more than US$10 billion. Tricolor Holdings did the same in early September amid allegations of auto loan fraud.

Jefferies has US$43 million, or 5.9 per cent, invested in Point Bonita’s accounts receivables purchased from First Brands, the statement said.

Other Point Bonita investors seeking redemptions include BlackRock, Morgan Stanley’s asset-management arm and Texas Treasury Safekeeping Trust, Bloomberg previously reported. BLOOMBERG

 

[k1976]

Dimon’s ‘Cockroach’ Fear Revives Threat of Cracks in Credit

Jamie DimonPhotographer: Jose Sarmento Matos/Bloomberg
By Sridhar Natarajan

October 15, 2025 at 12:45 AM GMT+8
Updated on October 15, 2025 at 8:20 AM GMT+8

Investors spooked by the implosion of auto lender Tricolor Holdings and car-parts supplier First Brands Group got little reassurance Tuesday from the head of the biggest US bank.

“My antenna goes up when things like that happen,” Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, said on a call with analysts.

“I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.”

Trump Threatens NYC Funding Over Mamdani After Adams Drops Out
Dimon Says ‘So Be It,’ Would Help Mamdani If He Wins NY Race
JPMorgan Chase Headquarters In NYC

Dimon’s Warnings on Credit Quality Overshadow Revenue Beats
Senate Banking Committee Holds Annual Oversight Of Wall Street Firm

Banks and Private Credit Clash After Dimon’s Cockroach Barb

Dimon Calls Out Weaker Job Market, Inflation as Provisions Rise
JPMorgan Chase & Co. He Says Employee Health Costs to Rise 10% in 2026

 

[LITTLEREDDOT]

Singapore’s sovereign wealth fund GIC sues Nio​

Oct 15, 2025

Nio at an Auto Show. Credit: Ifeng

Real-time notifications when critical EV data is released
All important data in one place
2,000,000+ data points
Become a member
GIC, the Singaporean sovereign wealth fund, which is the world’s sixth-largest sovereign wealth fund, has filed a lawsuit against Chinese electric vehicle manufacturer Nio and its executives in a US court.

The lawsuit alleges securities fraud, marking the first instance of a sovereign wealth fund suing a Chinese company listed overseas, as reported by Chinese media outlet Caixin.
The lawsuit, filed by the Singapore Government Investment Corporation (GIC), names Nio, its CEO William Li, and former CFO Feng Wei as defendants.

According to XiakeAuto, GIC’s central accusation is that Nio, through its battery asset company “Nio Battery Asset Co. Ltd.” (hereinafter referred to as “Weineng”), established with partners like CATL, allegedly inflated its revenue and profits. The fund claims Nio concealed its actual control over Weineng, thereby misleading investors and causing GIC to suffer investment losses.
The core of GIC’s lawsuit revolves around Nio’s alleged manipulation of financial statements through Weineng. GIC claims Nio used Weineng to inflate revenue and profits by prematurely recognising battery sales revenue and obscuring its actual control over the entity.

The controversy centres on Nio’s unique “battery swap + battery rental” model, known as BaaS (Battery-as-a-Service). In this model, users can purchase a vehicle without the battery, renting the battery from Weineng instead. The crucial point is that Nio recognised the entire battery sales revenue upfront when selling batteries to Weineng.
The dispute hinges on whether, under US accounting standards, this revenue should be recognised incrementally as users pay monthly rental fees, or if it can be recognised immediately because the batteries were “sold” to Weineng.

GIC’s lawsuit alleges that Nio established Weineng in August 2020 specifically to “optimise” its financial reports. This manoeuvre allowed Nio to immediately recognise substantial revenue while moving battery depreciation costs off its balance sheet. The effect was immediate: Nio’s Q4 2020 revenue doubled year-over-year, from 2.85 billion yuan (399 million USD) to 6.64 billion yuan (930 million USD).
GIC argues that if revenue had been recognised incrementally, as they believe is compliant, Nio’s performance at the time would have been significantly lower, and its stock price would not have surged to an all-time high of 62 USD in early 2021.
Nio, in turn, asserts that control over the batteries was transferred upon sale to Weineng, and its “performance obligations” were fulfilled, thus justifying the upfront revenue recognition. These revenues were recorded as vehicle sales revenue and disclosed as related-party transactions in financial reports.
Another major point of contention in the case is the extent of Nio’s control over Weineng, which involves the complex determination of a “Variable Interest Entity” (VIE).
GIC alleges that Weineng is not an independent company but rather a “shell” entity substantially controlled by Nio. If this claim holds, Nio would be required to consolidate Weineng’s financial data into its own reports, rendering the previous upfront revenue recognition invalid.
GIC provides several pieces of evidence:

• Intricate Equity Structure: After a capital increase in August 2021, Nio held 19.84% of Weineng’s shares, just below the 20% threshold that could trigger a presumption of control. GIC suggests this demonstrates Nio’s familiarity with and intent to circumvent regulations.
• Significant Actual Economic Interest: GIC claims that through accounts receivable and guarantees, Nio’s actual economic interest in Weineng amounted to 55%.
• Lack of Business Autonomy: Weineng’s entire business operations are dependent on Nio. The types, quantities, and even rental prices of batteries are determined by Nio. Battery operations, maintenance, and user billing are also handled by Nio or its subsidiaries.

Currently, the GIC lawsuit against Nio has been temporarily stayed by the court in early October 2025, pending the outcome of a prior class-action lawsuit filed by US investors.

 

[LITTLEREDDOT]

GIC sues EV maker Nio over alleged inflated revenue claims, shares plunge​

GIC alleged Nio made false claims about iits ties to an affiliated company called Nio Battery Asset – or Weineng in Chinese.

Oct 16, 2025

Hong Kong - Singapore’s sovereign wealth fund GIC has sued Nio in a US court, accusing the Chinese electric vehicle(EV) maker and executives of violating securities laws by inflating revenues.

The lawsuit, filed in August in the Southern District of New York, named the company, its chief executive officer Li Bin and former chief financial officer Feng Wei as defendants

Nio’s Singapore-listed shares plunged on the news on Oct 16, falling as much as 13.8 per cent to US$6.00. The stock clawed back some ground to trade 8.1 per cent down at S$6.40 as at 2.48pm.


GIC alleged the defendants made “materially false and/or misleading statements” about Nio’s ties to an affiliated company called Nio Battery Asset – or Weineng in Chinese – and failed to disclose key facts about its business and finances.

According to the complaint, those misstatements artificially inflated the value of Nio’s securities, causing GIC to suffer “significant losses.”

Nio operates a battery subscription model in which car buyers don’t have to purchase batteries outright. Instead, they can pay a recurring fee to access the company’s network of battery-swap stations.

GIC’s suit contended that Weineng’s financial records show it bought batteries upfront from Nio, allowing Nio to immediately record the full revenue from those sales – even though the end users hadn’t yet paid for the batteries. The filing argued that such income should have been recognized gradually, not all at once.

Nio didn’t immediately respond to a request for comment. GIC declined to comment to Bloomberg.

The case has been stayed by a judge as it’s similar to a previous suit filed in 2022 against Nio, according to an Oct 3 filing.


Nio, founded in 2014, was once seen as a rising star in the EV industry that could eventually rival Tesla. It’s known for its battery swap technology, which allows owners to switch out a depleted battery for a new one in minutes. Buyers have the option to purchase a Nio EV without the battery and instead opt for a subscription.

But this business model is capital intensive and has required building out expensive swapping stations, and the company has faced severe liquidity crises.

A 2022 report from New York-based Grizzly Research detailed these accounting practices. Nio said in response that it would launch an independent committee to investigate the claims, according to the court filings.

That led Nio’s American depositary notes to plunge, resulting in substantial losses, GIC’s filing said. The fund is seeking compensation for all losses relating to Nio’s wrongdoing and reasonable reimbursement of its legal costs, according to the documents. BLOOMBERG

 

[LITTLEREDDOT]

Tuaspring project was riskier than a typical integrated plant: Hyflux prosecution witness​

PUB committed to buying only desalinated water – and not electricity – from Tuaspring under a long-term agreement, the witness said.

Oct 27, 2025

SINGAPORE – The troubled Tuaspring plant came with a higher risk profile than what one bank lender understood to be typical of an integrated water and power plant (IWPP).

National water agency PUB committed to buying only desalinated water – and not electricity – from Tuaspring under a long-term agreement, according to Ms Jeanne Soh’s testimony at the State Courts on Oct 27.

Thus, margins could be squeezed depending on fluctuations in wholesale electricity pricing and the amount of electricity demanded, among other forms of risk arising from a new entry into power generation.

Ms Soh was part of a team at Sumitomo Mitsui Banking Corporation (SMBC) that worked on the Tuaspring loan negotiations at the time.

She is the first prosecution witness from among a group of six banks, which in 2010 and 2011 were in discussions with Hyflux to finance the plant for which the now defunct water treatment provider won the tender.

Former Hyflux chief executive Olivia Lum is facing charges of non-disclosure of material information in announcing the project win in March 2011, as well as in the issue of preference shares the following month, relating to Hyflux’s entry into power generation.

When Deputy Public Prosecutor Eric Hu asked about Ms Soh’s understanding of an IWPP, she said: “(Tuaspring is) different from our understanding of (an) IWPP because only the water has (a) purchase agreement and not the power.”

Ms Soh was then a vice-president of structured finance for the Asia-Pacific, dealing with energy and infrastructure projects for SMBC.

The other five banks involved were DBS Bank, Mizuho Corporate Bank, BNP Paribas, ANZ and MUFG.


The banks assessed that excess power generated by the power plant likely needed to be sold to the wholesale market, especially as it was not clear if the Energy Market Authority or electricity retailers were going to commit to buying electricity in advance, she said.

She contrasted this with IWPPs in the Middle East, where she said such integrated plants are more commonly found than in Asia. These typically have agreements in place for both water and electricity purchase, she said.

Ultimately, only SMBC, Mizuho and DBS collectively offered a loan of $150 million for the desalination plant – down from an initial proposal of $537 million for the whole project.

Earlier in her testimony, Ms Soh had said the understanding SMBC had in June 2010 was of Tuaspring as a desalination plant that PUB had called a tender for, with a water purchase agreement that was “quite in line with what we see on the market”.

Responding to another question from Mr Hu, Ms Soh said the six banks learnt of the power plant around November 2010.

“We were all quite surprised, or very surprised, because we were not expecting they were going to build a power project along with the desalination plant.”


Mr Hu then asked Ms Soh to give a walkthrough of the risks she highlighted in an e-mail dated Nov 19, 2010, to then Hyflux chief financial officer Cho Wee Peng.

Cho has been charged with conniving in Hyflux’s omission to disclose the information about Tuaspring.

Of the e-mail, Ms Soh said: “After learning that they are going to build a power plant, the lenders decided to come together to highlight the risk associated with the power plant to Hyflux.”

Asked about Hyflux’s response to the e-mail, Ms Soh said: “They continued to provide us with whatever information they (could) give at that point in time.”

These concerns from the November e-mail would later culminate in an 18-point list of questions the loan syndicate sent to Hyflux in December 2010.

The banks wanted to know how Hyflux intended to compete with the three dominant power generation companies then – PowerSeraya Group, Tuas Power and Senoko Power – given Hyflux’s inexperience with power generation.

They also sought a breakdown of cash flow projections between the power plant and desalination plant.

In addition, they wanted to find out if the loan facility for the desalination plant could access the cash flow for the power project as collateral, and vice versa.

“The two projects, notwithstanding that they called it an integrated project, to us, they are two different risk profiles,” Ms Soh said.

This also meant the potential need for the desalination plant to have a shorter loan tenor, with a more rapid rate of repayment.

Other concerns raised by the banks included how Hyflux arrived at the financial buffer built in for cost overrun and the completion schedule for the power plant and the desalination plant.

“If the power project gets delayed, the power project will not be able to supply electricity to the desalination plant,” Ms Soh said.

She added that costs would potentially be higher if Tuaspring needed to buy power from the grid in the meantime, impacting the ability for loans to be repaid.

A side letter signed by the banks was later issued in January 2011 to formally state their concerns.

Mr Hu also asked Ms Soh about the phrasing of an in-principle commitment letter issued for the desalination plant loan.

The letter had mentioned “in-principle management support”, instead of “in-principle approval”.

Ms Soh said the lenders were not comfortable with “using such strong language”, with the project having evolved to include a power plant. She also noted that the letter was not binding.

Two separate loan structures, with a higher debt servicing coverage ratio requirement of 1.5 times to 1.75 times or even higher for the power plant, were also mooted.

Near the end of the three-hour hearing, Mr Hu showed Ms Soh a tabulation of cash flow figures extracted from the financial model Hyflux had provided in seeking the loan. Mr Hu said: “Without the sale of power, no matter how much of (the) water is sold, the net cash flow will be negative.”

Lum’s defence counsel, Senior Counsel Davinder Singh, repeatedly objected to this tabulation.

“This document was not in existence, nor was this format in existence, at the material time,” said Mr Singh.

Nonetheless, Principal District Judge Toh Han Li initially allowed Ms Soh to refer to the tabulation.

Subsequently, Mr Singh said the document “leads one to (a) certain conclusion”, and had only been produced at the trial itself.

He added that “(to) suggest these are the numbers, these are the minuses, these are the pluses, leads the witness”.

The judge then called for the tabulation to be taken off Ms Soh’s display screen on the stand.

Mr Singh also objected to questions from Mr Hu on why SMBC did not take part in a subsequent $720 million loan by Maybank for the project.

“The foundation has not been established (on) whether SMBC was invited to be part of this facility.”

Rephrasing, Mr Hu asked if SMBC was involved in discussions on the loan with Maybank. Ms Soh said no in reply.

The trial continues.

 

[LITTLEREDDOT]

Hyflux did not initially reveal power plant plan to avoid leak of its strategy, says defence​

Sumitomo Mitsui Banking Corporation executive Jeanne Soh said she did not remember if Hyflux’s power strategy was shared with SMBC.

Summary

• Hyflux initially withheld its power plant plans from banks to prevent bidding strategy leaks to competitors for the Tuaspring project.
• After submitting its bid, Hyflux shared its power strategy and financial model with the banks, who remained "supportive" despite their concerns.
• Banks clarified "management support" meant credit approval was pending due diligence, and they continued working with Hyflux despite power plant risks.

AI generated

Oct 28, 2025

SINGAPORE – Hyflux did not initially tell potential bank lenders about plans to build a power plant, as it wanted to ensure “there was no leak of its bidding strategy to competitors” before it submitted its bid for the Tuaspring project, the defence told the State Courts on Oct 28.

In trying to show that there was nothing untoward about Hyflux not revealing its power strategy initially, lawyer Jaikanth Shankar – part of the legal team representing

Hyflux founder Olivia Lum – cited earlier trial testimony from Mr Nah Tien Liang.

Mr Nah, who is Hyflux’s former vice-president of investment, had made reference to an Oct 8, 2010 mandate letter, which spells out the conditions under which Hyflux and the consortium of banks will work towards a loan facility.

He had said that this letter did not reference the power plant because Hyflux viewed the power plant as being “very strategic”, Mr Shankar noted in his cross-examination of Sumitomo Mitsui Banking Corporation (SMBC) executive Jeanne Soh.

But after its bid was submitted on Oct 21, 2010, Mr Shankar said Hyflux voluntarily and openly shared its confidential information with the banks, including its bidding strategy and the power plant.

Ms Soh said she did not remember if Hyflux’s power strategy was shared with SMBC.

“But there was information shared with us,” said Ms Soh, now a managing director for structured finance at SMBC.

The consortium of banks comprised SMBC, DBS, Mizuho Corporate Bank, BNP Paribas, MUFG and ANZ.

In October 2010, they issued in-principle commitment to Hyflux’s $527 million term loan request, for its bid for the desalination project tender from national water agency PUB.

However, the banks did not know until November 2010 that the Tuaspring project included a power plant as well.

Lum, former chief financial officer Cho Wee Peng and four independent directors are fighting their non-disclosure charge, among other charges.

Mr Shankar pointed out that Hyflux “moved reasonably quickly in sharing its power strategy and financial model with the banks” soon after it submitted its bid.

He pointed out that the water treatment firm shared its power strategy with the banks in mid-November.

It also shared its financial model on Dec 1, 2010, and offered to provide a briefing on its power strategy and proposed power organisation on Dec 3 that year.

The lawyer also pointed to a Dec 8, 2010 letter that SMBC sent to Hyflux, after the consortium was informed of the company’s power strategy, power plant and financial model.

In this letter, it acknowledged it remained “supportive of (Hyflux’s) bid for this project”.

It said: “Subject to our financial credit committee’s approval, mutual agreement of the financing terms and satisfactory evaluation, we will work closely with you towards a successful financial close if you are awarded the preferred bidder.”

When the consortium of banks informed Hyflux in January 2011 that they were willing to explore financing the project, the word “approval” was replaced with the phrase “management support”.

The defence took Ms Soh through a Jan 12, 2011 e-mail from SMBC’s Mr Allen Hsiao to Hyflux, in which Mr Hsiao explained that the banks used “management support” because it reflected the status of the credit application process at the time.

Mr Shankar asked: “All the banks were saying at this stage was they haven’t received credit committee approval, and they want to make sure their letter reflected that?”

Ms Soh replied: “It’s clear that it’s not the credit approval stage. We preferred the phrase management support, not approval.”

The lawyer then asked: “In view of what was said about ‘management support’, management was supportive of the (Hyflux) bid?”

Ms Soh replied: “Management was supportive of us continuing to explore financing with Hyflux.”

The defence also took Ms Soh through a Jan 13, 2011 e-mail she had sent to Hyflux’s Jinny Goh. In it, Ms Soh said the bank group had discussed extensively on the “management support” phrase, and finally agreed to insert the debt amount of the power facility after initially wanting to remove it.

On Jan 14, 2011, the banks sent Hyflux another letter on its request for submission to PUB.

They said that they had in-principle management support to provide a credit facility of up to $283 million for the water desalination plant, and up to $244 million for the power plant.

It was important to split the two plants as they had different risk profiles, Ms Soh said on Oct 27.

When asked about the Jan 14, 2011 letter in her cross-examination, Ms Soh explained: “The language we used is heavily disclaimed because we have not proceeded with our due diligence of the power plant... It reflected what was provided by Hyflux to us because we have not done our own due diligence.”

Mr Shankar asked: “If at any point, the banks were so concerned about the project, the risk profile and bankability that they didn’t want to touch it, they would have said so to Hyflux?... In fact, if that was their view, they wouldn’t have issued the Jan 14, 2011 letter?”

Ms Soh replied: “I can’t speak for the other banks, but from SMBC’s perspective, we still do not have enough information about the power project.

“We still have concerns, but we (didn’t) walk away. We still continued to work with (Hyflux).”