Sources familiar with the situation say Hyflux is in talks with potential investors, after a previous $530 million pact with Indonesian Salim-Medco Investments (SMI) fell through in early April. "Potential investors continue to express interest to invest in the company," said a source who declined to be named as he is not authorised to speak publicly on the matter.
nTan Corporate Advisory was coming onboard, in a move some industry observers saw as a renewed effort at finding a new buyer for the beleaguered company, restructuring its debt and avoiding liquidation. nTan is headed by Mr Nicky Tan, a well known dealmaker in the local corporate scene.
PUB had said earlier it would take over the water plant for zero dollars - and waive its compensations claims on the company - should Tuaspring fail to keep the plant reliably operational. But this threat to take over the water plant at zero cost has angered Hyflux's 34,000 retail investors, who are owed $900 million in total. These investors fear they may hardly see anything back by the time any repayment money trickles down to them. "The notice by PUB will basically put pressure on all stakeholders to moderate their expectations and to quickly get a deal done and to engage PUB thereafter for it to reconsider its position," said another source who is familiar with the saga. Instead of taking over the water plant at zero cost and facing the ire of 34,000 retail investors, PUB could be persuaded to accept a new investor if the deal is viable enough. "If its concerns are addressed, there would be no reason why PUB would not reconsider its position given the number of investors and lenders - both retail and otherwise - who would be affected," the source said.
What has going for a potential deal is the sheer size of the debt and the fact that it concerns a resource of national interest, said a former financial advisor with expertise in debt restructuring.
Observers also noted that there may be political pressures to get a deal together. In this resource-challenged island state, water holds sway and its supply cannot be allowed to descend into chaos. "There are political ramifications. The pressure put on by powers-that-be to find a solution. I don't see how this will go under to the full liquidation model. It's a national issue," said the former financial advisor.
Retail investors, who are last in line when the repayments materialise, are hoping there will be a rescue deal and that the debts owed to them will not simply be written off.
Many of them are common men and women in the street, who now say they were not given enough information about these investment products they bought. One of these products was "perpetual" securities which offered them an annual return of 6 per cent "forever".
Dr Samuel Tan, assistant professor of accounting at the Singapore Management University said while it was debatable if these "perpetual securities" were too complex for the lay person to understand, Hyflux's financial reports were not easy to understand. "I can't say how complex perpetual securities are as an investment in themselves, but the complexity of Hyflux's financial statements could have made it difficult for retail investors to understand the value of its perpetual securities," Dr Tan said.
I shared a few months ago that in our Noble group discussions, trolls were planned from the very beginning (as investors) and supported each other to appear legitimate, investors end up self-blaming themselves, demoralizing and discouraging rebellion against the regulators, although it was the management created the fake valuations. In the end, the discussion group was like an eunuch.
Sounds familiar with Hyflux's telegram group right?
DEAR MTN NOTESHOLDERS!!! That's why the management want. Exactly!!! Our lawyers explained this situation to us a month ago. Notesholders are in the best-position, we are only about 10% of total claims and yet we determine the outcome because of our headcounts in Senior Class. Please stay united and Vote NO, everyone got to pacify us to move forward. Don't settle for 25%, GET 100%%% BACK.
ATTENTION NOTEHOLDERS!!! - PLEASE READ AND SHARE. WE HAVE HOPE.
As long as all Hyflux noteholders vote "No" , we can make bankers beg us to support because we have the numbers in Senior Class. We call the shots, according to our representative lawyer. He said we have a high chance to recover 100% if we stay united. If we say no, nothing can proceed.
As long as we stay as a team and reject, everyone will pacify us and give us back 100% + penalty interests. I am serious. Our Akin Gump lawyers had briefed those who involved. We dominate the votes in unsecured class. Bankers can continue to enjoy their banking relationship with Hyflux, but we just want our 100% back. It is really possible. Don't fall to SIAS's and Hyflux's lies and accept the haircuts.
We just need to say NO on April 5th. PLEASE PASS THE MESSAGE.
Yes! They presented the worst option to us first. Don't fall for it!