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Regulators Refusing to Act - Hyflux & Noble Group's Decline

JustLikeThis

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Major Change in Our Water Policy - Did the Indonesians promise a solution for Hyflux's retail investors?
1-2 months ago, Hyflux revealed that only Sembcorp and Keppel were pre-approved by PUB to bid Tuaspring and other all foreign suitors were barred from bidding. Earlier, Bloomberg first broke the news and disclosed that Sembcorp submitted a low-ball bid which was estimated to be less than 40% of Tuaspring's book value. Accepting this offer is a nail-in-the-coffin for insolvent Hyflux.

This week, Environment and Water Resources Minister Masagos Zulkifli twisted and turned our water policy by claiming that foreign ownership of Hyflux will not affect Singapore's water security. https://www.todayonline.com/singapo...will-not-affect-spores-water-security-masagos

What Triggered the Sudden Change in Our Water Policy
Masagos was refering to the possibility of Indonesia's Salim & Medco consortium taking over Hyflux (Change-of-Control for Tuaspring) which is against PUB's earlier stand. The original pre-conditions in the Indonesian's offer hinted massive loss-absorption for Hyflux unsecured bank credits and retail bond/preference share sholders which does not benefit the state or public investors, except Hyflux's management.

On surface, Masagos' statement further dashed hopes of a state bailout but bankers and analysts are sufficiently bewildered by this major u-turn on the ‘disproportionate’ foreign ownership:
  • Did Salim group promise some kind of capital protection for the 50,000 affected retail investors to qualify for the exemption? OR
  • Was Olivia the "untouchable", and PUB is only interested, to protect Hyflux's management?
Hyflux is a Major Collapse in Public's Confidence of the State
Hyflux was a pride of Singapore. Hyflux's collapse was due to her inability to refinance her debts cheaply and she is still highly-sought by Japanese and Chinese conglomerates because of the strategic utilities asset that she holds. A local government bail-out is socially-justifiable, profitable and important as neighbour, Malaysia turns volatile on water issues lately. However, the scholars repeatedly reiterate that such bail-out might send the wrong signal to the domestic corporate sector.

In the past 6-8 months, the public investors had been frustrated with Hyflux's empty promises and the government's indifference. The impact is far-reaching.

Banks are now issuing guidance to their RMs to avoid selling bonds to their clients, triggering a liquidity meltdown in local SGD bond market. There is also a saying that the recent surge in properties for auction is due to retail investors affected by Noble Group and Hyflux's defaults. A domino effect is also created when many more will have to downgrade their dwellings to patch the colossal share and bond losses to fund their retirement or kids' education. It is not just the private properties, but even HDB is affected as many Hyflux investors are commoners.

The Bias Towards the Indonesians
Now, all of the sudden, the Singapore government explained that there are safeguards in place for our water security, despite foreign ownership. If the Indonesians did not promise a rescue plan to safeguard of the retail investors, it is really hard to explain for PUB's policy change and the non-disclosures of the deal which was protested by the unsecured bankers. If there is no noble underlying-mission to bail out the retail investors, why not remove all restrictions on foreign bidders for Tuaspring or Hyflux to avoid capital-loss for the retail bondholders and preference sharers holders?
 

hofmann

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I posted this in another thread, but will repost here as it's relevant too:

http://www.hnworth.com/article/2018/11/12/we-all-love-to-hate-the-bond-market/

"Looking up defaulted bonds on Bloomberg, we noticed the amount of SGD dollar debt defaults is ranked 5th in the world for the past 4 years. As a currency, Singapore dollar debt outdid Canada, UK, Norway, South Korea, India, Hong Kong, Japan, Turkey, Switzerland, to name a few, only falling behind the US dollar, Chinese yuan, Europe (EUR dollar) and the Russian ruble.

That is some claim to fame for a small market like Singapore’s even as we noticed the numbers did not include the mega restructuring’s like Ezion and conveniently left out the Marco Polo Marine’s and Ausgroup, to name a few."
 

JustLikeThis

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I posted this in another thread, but will repost here as it's relevant too:

http://www.hnworth.com/article/2018/11/12/we-all-love-to-hate-the-bond-market/

"Looking up defaulted bonds on Bloomberg, we noticed the amount of SGD dollar debt defaults is ranked 5th in the world for the past 4 years. As a currency, Singapore dollar debt outdid Canada, UK, Norway, South Korea, India, Hong Kong, Japan, Turkey, Switzerland, to name a few, only falling behind the US dollar, Chinese yuan, Europe (EUR dollar) and the Russian ruble.

That is some claim to fame for a small market like Singapore’s even as we noticed the numbers did not include the mega restructuring’s like Ezion and conveniently left out the Marco Polo Marine’s and Ausgroup, to name a few."

If we include Ezion and Hyflux, we are second to China, in the world for corporate debt defaults.
 

hofmann

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If we include Ezion and Hyflux, we are second to China, in the world for corporate debt defaults.

Stumbled across this old article. Wow, MAS so powerless against the local banks???? Indeed the fabled controls of MAS are illusory.

https://uk.reuters.com/article/sing...es-aim-at-unrated-bonds-idUKL4N0P82AH20140627

*******

Singapore has considered a rating requirement for corporate bonds to help protect investors in the past, but bankers and issuers have strongly resisted such proposals.

Local investors have been happy to buy unrated bonds on the strength of a company's brand or its government links, while the unrated format saves issuers transaction costs, helping attract some smaller companies to the capital markets.

However, the looming introduction of global capital and liquidity standards for insurance companies has prompted the MAS to revisit the contentious issue.

At the moment, unrated bonds attract the same risk charges as non-investment grade debt under the risk-based capital framework for insurers. Insurance fund managers have asked the MAS to reconsider that rule, which they say will stop them from buying bonds from financially strong issuers.

Singapore's insurers hold about 20% of the city's stock of corporate bonds, mostly in the form of unrated securities from government-linked companies and statutory boards. Housing and Development Board, the largest local issuer other than the government, has no rating.
 

rushifa666

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Haha iceberg poked them good. I dont know what is left if global investors run. This should have been code red for mof
 

Focus

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  • Did Salim group promise some kind of capital protection for the 50,000 affected retail investors to qualify for the exemption?
I think it will shock the citizens that our country can't be bothered to save Hyflux and willing to let indonesians control Hyflux. This is not the Singapore that I trusted.

So I agree that the only explanation is that the Salim Medco group got the good deal because they promise to bail out the retail investors.
 

Focus

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In the past 6-8 months, the public investors had been frustrated with Hyflux's empty promises and the government's indifference. The impact is far-reaching.

Banks are now issuing guidance to their RMs to avoid selling bonds to their clients, triggering a liquidity meltdown in local SGD bond market. There is also a saying that the recent surge in properties for auction is due to retail investors affected by Noble Group and Hyflux's defaults. A domino effect is also created when many more will have to downgrade their dwellings to patch the colossal share and bond losses to fund their retirement or kids' education. It is not just the private properties, but even HDB is affected as many Hyflux investors are commoners.

Interesting notion that Hyflux is causing selldown in local property scene.
I was wondering where the billions of losses in Hyflux and Noble are coming from.
 

JustLikeThis

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WATER treatment firm Hyflux is still working towards formulating the terms of a scheme of arrangement involving creditors, the group said, dismissing recent media articles reporting the purported details of a formal plan proposed to its senior unsecured financial creditors as mere speculation.
https://www.businesstimes.com.sg/co...-hammering-out-terms-of-scheme-of-arrangement

Does anyone have the link to the "recent media articles reporting the purported details of a formal plan" that they are refering to?
 

Focus

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WATER treatment firm Hyflux is still working towards formulating the terms of a scheme of arrangement involving creditors, the group said, dismissing recent media articles reporting the purported details of a formal plan proposed to its senior unsecured financial creditors as mere speculation.
https://www.businesstimes.com.sg/co...-hammering-out-terms-of-scheme-of-arrangement

Does anyone have the link to the "recent media articles reporting the purported details of a formal plan" that they are refering to?

it's in business times. Olivia & Salim played very dirty. Financial Advisors EY proposing paying $39m for the $900m of perpetual bonds and preference shares.
Over 90% capital losses.

I think sure riot if the same article published on sunday times or straits times.
https://www.businesstimes.com.sg/co...erms-of-debt-revamp-after-some-lenders-reject
 
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JustLikeThis

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DEAR HYFLUX INVESTORS,

The situation is getting out of hand, and we have enough of empty promises.

Please kindly share this thread and other discussions on other forums and facebook.
Please make it a point to participate in such discussions on forums or facebook so that we can go public about our grievances.

Do your part and help ourselves.
 

JustLikeThis

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it's in business times. Olivia & Salim played very dirty. Financial Advisors EY proposing paying $39m for the $900m of perpetual bonds and preference shares.
Over 90% capital losses.

I think sure riot if the same article published on sunday times or straits times.
https://www.businesstimes.com.sg/co...erms-of-debt-revamp-after-some-lenders-reject

Hyflux has been deceiving investors and the leaked proposal is similar as Noble's proposal to their perpetual bondholders.
95% losses by my calculation. Are these people scammers, all the money vanishes overnight?
 

gummybear

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Hyflux has been deceiving investors and the leaked proposal is similar as Noble's proposal to their perpetual bondholders.
95% losses by my calculation. Are these people scammers, all the money vanishes overnight?

If so, might as well just make the company bankrupt better
 

JustLikeThis

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If so, might as well just make the company bankrupt better

All these while, investors had to depend on Bloomberg or debtwire for accurate insights. EY's proposed $39m for the $900m of perpetual bonds and preference shares reminds me of similar offer from Noble.

Noble forcing perpetual bonds holders to absorb 93.5% capital reduction on their par value.
http://infopub.sgx.com/Apps?A=COW_CorpAnnouncement_Content&B=AnnouncementLast3Months&F=AWGPI0WHQZAEKM8N&H=5bcbe31522cc26fd984e940d7bb8de838fb63255b8f4d8380f04795c8e232981&fileId=Perpetual Capital Securities Exchange Offer Launch Announcement.pdf

So all the valuations suddenly disappeared in Hyflux? False statement and fake accounting in Hyflux like Noble all these years?
 

JustLikeThis

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Tan Kok Quan Partnership lawyer Eddee Ng, on behalf of BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered Bank, had argued for the moratorium to be extended to Jan 16 only.

Under the restructuring timetable put forth by Hyflux, it should be clear by mid-January if Hyflux has been able to get all creditor groups on board or not, Mr Ng said.

“It shouldn’t have to be the case that the UWG needs to come to the court to get the moratorium lifted (if) this entire restructuring process is a no-go. It’s the company that should come to the court and (the) company should be kept on a very tight leash in so far as time is concerned.”

The informal steering committee of Hyflux medium-term noteholders took the same position.

In court on Monday, Justice Abdullah noted that many retail investors are closely following the Hyflux case. One retail investor had written to him to voice concerns “about the situation and where things are going”, including concerns about possible write-downs, the judge noted. He said: “I understand their concerns but I think my role, my function and powers under these applications isn't that wide.

“The court in its proceedings under the restructuring regime is (mainly) concerned about the propriety of the sanctioned schemes of arrangement, and the scope for the court to go into questions of substance of any kind isn't really that wide.”

However, these retail investors’ perspectives may be considered “to some extent” if negotiations reach the stage where a scheme application is submitted, or perhaps at the stage where any rescue financing is contemplated, Justice Abdullah said.

https://www.businesstimes.com.sg/co...s-hyflux-debt-moratorium-to-end-of-april-2019
 

JustLikeThis

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All these while, investors had to depend on Bloomberg or debtwire for accurate insights. EY's proposed $39m for the $900m of perpetual bonds and preference shares reminds me of similar offer from Noble.

Noble forcing perpetual bonds holders to absorb 93.5% capital reduction on their par value.
http://infopub.sgx.com/Apps?A=COW_CorpAnnouncement_Content&B=AnnouncementLast3Months&F=AWGPI0WHQZAEKM8N&H=5bcbe31522cc26fd984e940d7bb8de838fb63255b8f4d8380f04795c8e232981&fileId=Perpetual Capital Securities Exchange Offer Launch Announcement.pdf

So all the valuations suddenly disappeared in Hyflux? False statement and fake accounting in Hyflux like Noble all these years?

Good Article!
EY is screwing Noble & Hyflux investors.




Among the pieces we had run around that time was an interview with Michael Dee, a onetime head of Morgan Stanley’s business in Southeast Asia and a former senior official at Temasek Holdings. Dee had said in the interview that Noble was not properly addressing the issues raised by Iceberg Research. He also poured scorn on the job that its auditor EY was doing. And, he called on regulators to suspend Noble’s stock until all doubt about the valuation of the assets and liabilities on its books could be cleared up.
 
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JustLikeThis

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Locally, the Singapore bond market has other problems besides Hyflux and CW Advanced Technologies’s default in June this year.

  • What about Lippo Group (linked to Lippo Malls Indonesia Retail Trust, OUE and First Reit etc) whose deputy chairman’s home was raised last month on corruption charges?

http://www.hnworth.com/article/2018/11/12/we-all-love-to-hate-the-bond-market

Singapore bonds face contagion fears from Lippo probe
https://www.businesstimes.com.sg/companies-markets/singapore bonds face contagion-fears-from-lippo-probe
 
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