Hyflux

[pianist]

its expensive advisers wong and partnership and E&Y are the winners finally...

[CY09]

I think Hyflux reached a point where secured creditors knew that they can get their full principal if they forced a fire sale. on the other hand, if Hyflux continues as a going concern, it means creditors have to keep lending them. Creditors will not get their full principal until god knows when due to Hyflux's poor cash flow generation ability. In addition, creditors can only squeeze Hyflux to a small interest return (maybe 5%) and not further due to its cashflow. It means their money cannot be deployed elsewhere in the current market where interest rates are rising; to creditors, it is not a palatable deal.

Hyflux doesn't want liquidation to happen because it will mean the end of the company and possibly zero value for shareholders and perps. This is evident where a simple 30% discount to its stated assets in the balance sheet, except cash, will mean wiping out of equity and eating only approximately 10 million into unsecured creditors (unsecured debt is about 1 billion). It shows creditors will go relatively unscathed. In the bond market, Hyflux's bonds are still selling at 80+ cents to a dollar.

Hyflux has not borrowed enough until it becomes the bank's problem and not theirs.

"If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."

What matters now is how much discount does Hyflux has to take if it is forced to sell. If it can prove that its assets can only fetch 20% of its stated value and banks will be adversely hurt like in Ezion's case, I am pretty sure a bond to equity deal will happen.

Let's see the final outcome of Hyflux's debts

<not vested in any Hyflux instruments any longer>

[AQ.]

I think more importantly is what the entire industry does. At current levels, all gencos are bleeding badly with the exception of YTL (as of 2016) - perhaps everyone is bleeding now as of 2018. I don't think it is reasonable for the regulator to step in and adjust vesting levels unilaterally either - such a move shifts power from consumers to gencos and is not equitable esp when production is a commercial decision. Only good thing for Hyflux is that even if Hyflux goes bust and its entire capacity is taken out, the whole industry will still bleed - it will take the bankruptcy of 2-3 small players or one of the big ones for rebalancing to work sharply. The former seems drastic and the latter unlikely. So while Hyflux's problem is not too big to fail for the banks, it is also too small for the problems to be solved by going bust.

I do think Hyflux is doing the right thing by applying for protection and then reorganising its debt load. The only way out for Hyflux, i think, is firstly for the industry to agree on something (and is acceptable to the regulator less it be deemed as manipulation). This then reduces the entire industry bleed and restores clearing prices. Secondly, a lower-debt-for-longer deal with creditors to reduce the cashflow strains. Hyflux definitely has a liquidity issue. If not handled well this turns into a solvency issue.

So is Hyflux insolvent now? It really depends on TuaSpring - how good is the current book value? What is clear is that at current sentiments, best bids will prob mean -ve equity, guaranteeing insolvency. But looking at projections from EMA, demand is projected (as of 2017) to grow at 1.3-1.9% from 2018 til 2028 so it does sound dumb to firesale everything @ current levels agst dynamics. So industry discussions, white knight collaborations and debt restructuring seems like the right way to go.

 https://www.ema.gov.sg/cmsmedia/Singapor...l%20v2.pdf

Unfortunately Hyflux took a massive risk and is now paying for it. reminds me of a chinese saying "一失足成千古恨，再回头已是百年身“

[BRT]

a "so far so good and we think it will continue to be so" reassurance from the landlord.
http://infopub.sgx.com/FileOpen/Hyflux%2...eID=507186

"With respect to the Hyflux Membrane leases, the Manager wishes to inform:
 all rental payments made by Hyflux Membrane have been prompt since the property was
acquired in December 2017;
 there are currently no arrears due from Hyflux Membrane; and
 Management has had discussions with Hyflux and its financial advisers. We believe that
the property is essential to the continued operation of Hyflux Group’s business. As such,
we believe that rental payments will continue throughout the reorganisation process."

[BRT]

Hyflux woes not a sign that loans to power companies are riskier: Moody's
https://www.businesstimes.com.sg/compani...ier-moodys

SIAS urges Hyflux to give equal treatment to holders of its perps
https://www.businesstimes.com.sg/compani...-its-perps

"It must be recognised that these investors are not on the same footing as institutional investors. They have put their hard earned life savings into this company, trusting the owners and the management to deliver. They must find the way to preserve value for these investors, though it may take time."

equal treatment is tough. it may be too tempting to not pay anything perpetually, at the expense of eternal reputation damnation. ruthless but convenient way out.

[CY09]

As said previously, the power generation industry in Singapore is moving towards a market model where power generation companies are now free to sell their electricity to households. However, based on prices presented to Jurong residents, Keppel and Sembcorp are selling electricity at a lower rate than Hyflux's. If our country continues to be oversupplied by electricity, logically it means Hyflux will not clinch much sign ups with consumers. It is back to square one for Hyflux.

SIAS statement on perp holders is a tad too late. Ezion perp holders were also "killed" but were fortunate that they could exchange for Ezion shares at the same price as unsecured bondholders. Hyflux can offer the same deal where unsecured bondholders and perp holders get to exchange shares at the same share price rate, this allows for equal treatment; however, it is likely these groups of people will only be able to sell their shares at a price lower than they exercised (aka a haircut)

[sgdividends]

Hi, there were a number of defaults like nam Cheong , swiber , ezion , trikomsel.

Does anyone know where I can find the consolidated list of the haircuts the noteholders or perp holder got?

[sgdividends]

Series 003 to Series 007 bond holders have two options. Option A is to defer their principal for seven years, and collect a small 0.25 per cent coupon per annum and 5 per cent redemption premium at the end of seven years. Option B shortens the wait to six years, and instead of a redemption premium, bond holders can swap their holdings for equity.

If a bond holder chooses to convert his entire principal into Ezion shares, he would absorb a 36 per cent haircut based on the initial conversion price of 30.8 cents, which is the six-month volume weighted average price (VWAP) per share, and the last traded price of 19.7 cents.

For Series 008 perpetuities holders, Option C is similar to Option A except they have to wait 10 years instead of seven. Or they can choose Option D, where they continue to hold a perpetual security but can also swap their holdings for equity


---------+++++-----------.

The above is for Ezion.

Perp holders 0.25% pa and wait 10 years with a 5% premium .
Not as bad as I thought.
I wonder what is option D though , not clear

Is hyflux business worse than ezion?

[CY09]

https://www.channelnewsasia.com/news/bus...x-10407930

I too was once nearly fooled by a belief that Hyflux will redeem its perps and that the downside will be holding to a paper with 8% interest. Didn't expect there was a worse scenario where Hyflux decides not to pay at all.

While Hyflux perps value wont be zero, my sensing is that Hyflux's mgmt are probably going to do an "ezion" by offering perp holders either i) an equity swap at a certain price or (ii) a terrible bond deal offering interest rates close to zero. In the end, Perp holders will be forced to take option (i) and lose majority of their principal

[corydorus]

https://www.channelnewsasia.com/news/bus...x-10407930

I too was once nearly fooled by a belief that Hyflux will redeem its perps and that the downside will be holding to a paper with 8% interest. Didn't expect there was a worse scenario where Hyflux decides not to pay at all.

While Hyflux perps value wont be zero, my sensing is that Hyflux's mgmt are probably going to do an "ezion" by offering perp holders either i) an equity swap at a certain price or (ii) a terrible bond deal offering interest rates close to zero. In the end, Perp holders will be forced to take option (i) and lose majority of their principal

Technically they can don't pay and don't redeem perpetually. One of key reason I decided not to wait and sell with a slight kopi money loss.

Cory