Hyflux

[weijian]

nothing new but this article does put together lums story quite nicely with some tidbits of info here and there

https://www.dealstreetasia.com/stories/h...um-130319/

By early 2011, it had a market value of more than $1.6 billion. That year, Lum flew to Monte Carlo to be the first woman presented with Ernst & Young’s World Entrepreneur of the Year award. It was also the year Hyflux won its biggest project: the Tuaspring combined desalination and power plant. 

In 1 of the townhall meetings, OL revealed a 8mil population projection when they decided to bid for TS. In 2011, she was also at the height of her prowess and aura when she led her team to bid for their most ambitious project to date. The world was at her feet as it acknowledged her as an "Entrepreneur of the Year". Who could foresee that she wouldn't get what she wanted then, or in other words, who would dare to say "No" to her then? Saying "No" to her then - was denying the wisdom of the markets who made her 1 of wealthiest self-made technie millionaire and also the panel judges in the 2011 award!

https://www.ey.com/en_gl/weoy/past-winners

[valueinvestor]

Considering Hyflux was the one who built the first Singapore desalination plant, it is reasonable to assume they knew what they were doing when they bid for Tuaspring in 2011.  Hyflux wanted Tuaspring at all cost.  After EMA and PUB announcements, we now know the desalination plant lost money even when USEP was 60+.  There is no upside to the desalination plant and the contract signed with PUB is destined to be loss making for the entire period of 25 years (as expected by Hyflux).  Of course, the power plant project, which is supposed to offset the desalination loss, also did not work out as planned.


Back to the 2016 Perps, I was originally of the view there was an absence of malice in the retail offer as the directors also subscribed.  With the Karlmarx's vegetable analogy, I change my opinion.  In addition, the 20m perps reserved for management was undersubscribed by 70% despite the overwhelming retail application.... at least most of Hyflux management were not willing to risk any monies for that 6% return.

 
The insiders knew what outsiders didn't !

[karlmarx]

Back to the 2016 Perps, I was originally of the view there was an absence of malice in the retail offer as the directors also subscribed.  With the Karlmarx's vegetable analogy, I change my opinion.  In addition, the 20m perps reserved for management was undersubscribed by 70% despite the overwhelming retail application.... at least most of Hyflux management were not willing to risk any monies for that 6% return.

Only the BOD will know, deep in their hearts, why they bought the perps. 

The rest of us can only speculate or conjecture.

[corydorus]

We could also say the BODs are encouraged to support the company which any good senior employees will do sincerely. They did and they got themselves beaten for it.
Parent do own it if their child follow what they do. From value investment view point, expecting management to own investor decision because they follow what management does is not right imo. They can use it as a reference, but the management certainly not responsible for it. Is similar to any directors buying their own company shares to show confidence or support of their own company. Basically just it.

[Shiyi]

Hyflux has engaged nTan Corporate Advisory as an additional advisor in debt restructuring.
Recall that this advisory firm charged professional fees of $12 million as an advisor for TT International.
And this has not taken into account the legal fees.

I suppose the professional fees, as trade creditor, has first claim.

[weijian]

A few days ago, according to Mr David Gerald (SIAS), there is a restructuring plan that may allow the 900mil PS/perps to remain whole. I took a look at the BS again based on 9M18:

Current equity (9M18)= -128mil
If TuasSpring is been seized by PUB/Maybank = It's current assets for sale of 651mil and current liabilities for sale of 558mil will go to zero (PUB will claim it back at zero cost, while Maybank foots the remaining) = 558 - 658 = -93mil
New equity = -128 - 93 = -221mil (contains 1.57bil of loans and 495mil of perps)
Actual equity (accounting for perps) = -716mil (contains 1.57bil of loans)
Based on a simplistic calculation of payables/receivable/cash, immediate working capital demands (shortfall) = cash + receivables -  payables = 193 + 177 - 550 = -180mil

So of the 400mil, estimated ~180mil is required for working capital shortfall. The remaining 220mil will need to face the 1.57bil of loans, not mentioning that it is in negative equity of -716mil. The only way is for all the banks/perps/ps holders to stop their claims for a period of time, while keeping debt in tact. Then question comes - Assume all creditors stop their claims, how long will it take for Hyflux to earn 716mil to at least get back to positive equity value?

Hyflux 9M18 results: http://investors.hyflux.com/newsroom/201...BM2U.1.pdf

Hyflux gets letter of intent for possible S$400m injection

SINGAPORE: Hyflux is engaging with potential white knights overseas for a new restructuring deal worth S$400 million, said the embattled water treatment firm in a filing to the Singapore Exchange on Thursday (Apr 25). According to Hyflux, it has received a non-binding letter of intent from one such party - a developer and owner of water and power utilities based in the Middle East with a “reputable track record”. Hyflux said the possible injection of S$400 million will be used for equity and working capital purposes and possible urgent interim funding.

https://www.channelnewsasia.com/news/bus...n-11477756

[ACTIVIST SPEAKS]

Remember Mdm Loo who asked that her PCS and CPS remain in the books...looking like she may get what she wants, except they probably just stay there and do nothing for her for a long long time. Perhaps Justice Aedit Abdullah has a point when he asked yesterday whether it was better to be merciful and liquidate the company or have it go into judicial management.

[brattzz]

JM sir, oil prices trending up, electricity may start to cost more!! 💪💪💪

[weijian]

Salim came in and wanted a 60% stake with 400mil (+130mil shareholder loan). Now Utico is getting 88% with 300mil (+100mil shareholder loan). These money is not enough to even pay the senior creditors which are owed close to 1 billion, and this is not accounting for any contingent claims.

A slight difference would be the intention to exchange debt with equity in Utico (which is an unlisted entity so far). The previous Salim offer make sense because it asking for a write down to get a clean slate but i am not sure how Utico is going to benefit in this if most of these claims are still outstanding. It could become zombie debt but it still doesn't make sense from a business standpoint.


JOINT ANNOUNCEMENT – UPDATE

Hyflux Ltd. (the “Company”, and together with its subsidiaries, the "Group") and Utico FZC (“Utico”, together with the Company, the “Parties”) refer to the ongoing court supervised reorganisation process and the Company’s announcements on 25 April 2019 and 3 May 2019 in relation to receipt by the Company of a non-binding letter of intent from Utico for an investment in the Company.

The Parties wish to update that post the 27th June 2019 deadline for the Parties entering into a binding agreement, there have been informal discussions ongoing between the Parties in respect of Utico’s proposed investment in Hyflux Ltd ("Proposed Investment") and the Parties are now progressing towards a deal subject to approvals from all stakeholders and definitive documents being finalised and entered into.

The Proposed Investment involves the Parties working together to implement a deal which will see Utico invest in a 88.0% equity stake in the Company for an investment amount comprising S$300 million as equity and S$100m as a shareholder loan. This is subject to discussions being completed with the relevant stakeholders and definitive documents being executed expeditiously. The Parties are cognisant of time being of the essence to preserve value.

https://links.sgx.com/FileOpen/Joint%20H...eID=569933

[weijian]

UPDATES ON REORGANISATION PROCESS – EXCLUSIVE DEALING WITH UTICO FZC (“UTICO”) UNTIL 26 AUGUST 2019

Hyflux Ltd. (the "Company" and together with its subsidiaries, the "Group") refers to its announcement on 5 August 2019 on Utico’s deadline of 26 August 2019 for the Company to enter into a definitive agreement with Utico in relation to the latter’s intended investment in the Group. The Company wishes to update that as negotiations with Utico is the most advanced amongst all the potential investors, the Company intends to engage exclusively with Utico from now until 26 August 2019. The Company and its advisors will negotiate diligently with Utico with a view to entering into a definitive agreement by 26 August 2019

https://links.sgx.com/FileOpen/20190816%...eID=575056