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Why would SM want to inject money to Hyflux just to pay down debt-instruments? It makes no financial sense to SM. It is the company that is being saved, not the shareholders or the debt holders. Olivia is happy because she can have her job back, and another shot at making things work.
You can be sure that SM is certainly not here to do charity.
As for the debt holders, between say 30 cents on the dollar, or zero if SM walks away, I think most will see that this is perhaps as good as it gets. Debt holders have nothing to bargain with.
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(22-10-2018, 10:10 PM)dreamybear Wrote: According to Hyflux's webpage https://www.hyflux.com/financial-reorgan...n-process/ updated today 22 Oct 2018, .........
Q: "How does this affect the Tuaspring sale process? "
A: "The Investor is investing in the existing Hyflux Group, which includes Tuaspring. Hyflux will no longer be pursuing a voluntary sale of Tuaspring and will be engaging with the secured bank creditor on this."
...........
It seems that SM / Hyflux intends to keep TS.
My guess is :
The Sembcorp bid may be around 400m which is the amt Maybank can recover in the event of a sale to Sembcorp. Now, SM is injecting a similar amount for Hyflux to pay off Maybank and the 130m working capital is to last till the various projects turn cash flow positive/profitable.
This makes it likely that one of the plans would be for the preference shares/perpetual bonds holders' stakes to get converted into equity, making it a "cleaner equity" structure, and SM would own 60% after that.
130 million is not working capital. It is , together with 400 million , to pay back the various creditors.
30 million is the working capital, and termed as rescue financing .
400+130-30 million =500 million to pay back the various existing creditors since 30 million is ranked the highest as it is rescue financing
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(22-10-2018, 10:16 PM)karlmarx Wrote: Why would SM want to inject money to Hyflux just to pay down debt-instruments? It makes no financial sense to SM. It is the company that is being saved, not the shareholders or the debt holders. Olivia is happy because she can have her job back, and another shot at making things work.
You can be sure that SM is certainly not here to do charity.
As for the debt holders, between say 30 cents on the dollar, or zero if SM walks away, I think most will see that this is perhaps as good as it gets. Debt holders have nothing to bargain with. Yes. Not a charity.
The thing is , how do we know this is the best deal?
Does the management retention shares for Key personnel play a part?
I mean, example,there is a deal 1billiin for 60%. Current BOD booted out.
Compared with current 400 million for 60%, current BOD gets management rententjin shares.So the BOD chooses this instead.
Retail investors don't know if his is the case.
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23-10-2018, 09:22 AM
(This post was last modified: 23-10-2018, 09:30 AM by cfa.)
(23-10-2018, 06:32 AM)sgdividends Wrote: (22-10-2018, 10:16 PM)karlmarx Wrote: Why would SM want to inject money to Hyflux just to pay down debt-instruments? It makes no financial sense to SM. It is the company that is being saved, not the shareholders or the debt holders. Olivia is happy because she can have her job back, and another shot at making things work.
You can be sure that SM is certainly not here to do charity.
As for the debt holders, between say 30 cents on the dollar, or zero if SM walks away, I think most will see that this is perhaps as good as it gets. Debt holders have nothing to bargain with. Yes. Not a charity.
The thing is , how do we know this is the best deal?
Does the management retention shares for Key personnel play a part?
I mean, example,there is a deal 1billiin for 60%. Current BOD booted out.
Compared with current 400 million for 60%, current BOD gets management rententjin shares.So the BOD chooses this instead.
Retail investors don't know if his is the case.
She would choose the one who would agree to retain her for many more years . YTL bought over Power Seraya , the whole management team were replaced one year later . Even capable CEO John Ng had to leave in 2013.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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23-10-2018, 09:53 AM
(This post was last modified: 23-10-2018, 11:01 AM by AQ..)
(22-10-2018, 08:40 PM)sgdividends Wrote: BUT, SM just wants the full and final settlement of perps, prefs, MTNs e,t,c. So they are sharks. Not white knights. I hope the above pans out but Media seems to state that they intend to keep assets intact.
If SM r sharks then Sg Inc is sharks-morphed-into-vultures, with Sembcorp (with the luxury of the monopoly of bids) bidding half the replacement costs. This is with USEP @ 117 averaged for Sep vs the lows of 60-80 for past 2 yrs.
Still to see if PUB approves SM's bid
best case scenario: shareholder's loan of 130mio will settle 265mio of MTN; 400mio equity settle 900mio perps+pref (so debt-for-debt and equity-for-equity) so
$1 MTN claim = 49c cash+ rest in equity
$1 perp/pref claim = 44c cash+ rest in equity
worse case scenario:
$1 MTN gets full repayment
$1 perp/pref claim gets 29c cash+ rest in equity
whether u vote for it will dep on cost of entry+what u think of valuation post restructuring.
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Hi AQ,
The condition for SM investment is that bondholders and perpetual and preference shareholders do not have any more claims to hyflux.. So the first paragraph valuation of hyflux may not hold true.
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(14-12-2018, 11:05 PM)touzi Wrote: It never rains, but it pours. Really suay!
https://www.straitstimes.com/business/co...or=CS11-86
Doing Business in volatile region is not only risky. It really happens more often than you think it would.
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It looks like the situation is looking clearer, albeit not in a good way. The PCS and CPS holders were threatened that they will get back nothing if they do not support the restructuring deal with SM Investments. The purpose of the townhall meetings seem to be to continuously lower expectation of the PCS and CPS holders -- who are the largest and lowest-ranked creditors -- to ensure that they eventually support the restructuring deal.
https://www.businesstimes.com.sg/compani...iquidation
Bank creditors: Safe
Medium Term Notes: SM said no extension of maturity. Most likely conversion to equity.
Perpetual Capital Securities: Most likely conversion to equity.
Cumulative Preference Shares: Most likely conversion to equity.
Since it has become quite clear that the MTN, PCS and CPS will be converted to equity, what is the conversion ratio like?
SM Investments' $400m deal for 60% of Hyflux values the company at $666m. Which means the remaining 40% of shareholders will get shares valued at $266m.
The total value of MTN, CPS and PCS are about $1,165m. How to fit $1,165m into $266m? We have not even included equity shareholders, who are likely only to be given a tiny token stake, if at all.
Obviously, the value of the MTN, CPS and PCS will have to be whittled down to about a fifth of its value. The more senior ranking debt will obviously get more. One can make their own guesses at how much each instrument will be cut. I don't think the CPS and PCS holders will get back more than 15% of their capital, and it will be in shares, which will be subject to selling pressures upon completion of SM restructuring, and resumption of trading.
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19-01-2019, 12:32 PM
(This post was last modified: 19-01-2019, 12:33 PM by weijian.)
It remains to be seen how much Mgt shares will be given (well, we could probably use the more high profile Noble/MPM which is ~7-10% of the new entity) but Kak Olivia is honorable enough to give up all her Mgt shares.
With SMI coming in at 60% stake, this is effectively a “takeover” which is unlike other companies undergoing restructuring where the founder continues to drive the company. I have volunteered to give up receiving any management shares, meaning that my founding stake in Hyflux will be reduced to almost zero
Speech by Ms Olivia Lum: http://infopub.sgx.com/FileOpen/Town%20H...eID=540918
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