Date: September 29, 2019
Clarifications to statements in the articles published
- in the Straits Times dated 28 September 2019 titled “Utico backs Hyflux debt moratorium extension” (“ST Article”);
- on CNA dated 27 September 2019 titled “Utico says it will support Hyflux’s moratorium extension if company stops ‘value leakage’” (“CNA Article”); and
- in the Business Times dated 28 September 2019 titled “Utico seeks Hyflux confirmation that moratorium extension will not be prejudicial to creditors” (“BT Article”) (collectively, the “Articles”)
The Securities Investors Association (Singapore) (“SIAS”) refers to the Articles and seeks to clarify a number of statements which were made therein.
Focus group meeting on 1 August 2019
SIAS had, at the request of Utico, organized a focus group meeting for a small group of P&P holders (“Focus Group”). This meeting which was attended by a very small group of P&P holders, was held at Utico’s request to allow Utico to seek feedback from the Focus Group on Utico’s proposed deal.
Subsequent to the Focus Group meeting, at Utico’s request, SIAS carried out a poll to get feedback from the Focus Group on Utico’s proposed deal. As the Focus Group only represented a very small sample size of the P&P holders, SIAS informed Utico, when providing them the results of the poll that these results cannot be taken to be representative of the views of all the P&P holders. SIAS also qualified that the results of any formal voting exercise may vary from the results of this poll. It is thus incorrect, as reported in the BT Article that “this approval from the PNP investors is binding”. The BT Article and ST Article also reported that “more than 77 per cent of representative PNP attendees approved [Utico’s / the PNP portion of the] offer”. Such approval is, at best, a representative of the percentage in number of parties which responded to the poll. It does not represent the percentage in value. In addition and crucially, this poll is not binding on any of the parties who participated in the poll and is not reflective of the views of the general pool of P&P holders.
The CNA Article also quoted Utico in the following manner:
We remain committed to Hyflux, along with the creditors and PNP, as an ethical ‘white knight’ investor,” said chief executive Richard Menezes, who added that the company held a townhall session with a “representative” group of Hyflux’s retail investors last month and “received majority approval” from those present.
“Utico received majority approval from the representative PNP attendees for the townhall conducted at Sheraton Singapore on Aug 1, 2019. The approval poll of that was over 77 per cent,” according to Friday’s statement.
“The representative sample as per SIAS was accurate within plus or minus 5 per cent,” said the spokesperson.
In response to these quotes and as clarified earlier, the Focus Group and any poll results cannot be said to be representative of the general pool of P&P holders. Any “majority approval” referred to in Utico’s statements must also be read with the clarifications above. SIAS does not understand how Utico arrived at the conclusion that “The representative sample as per SIAS was accurate within plus or minus 5 per cent”.
The BT Article and ST Article reported that the restructuring agreement has received the support of creditors and SIAS. This is incorrect from SIAS’ perspective. The terms of the restructuring agreement have not been agreed by the relevant parties and as announced by Hyflux Ltd on 28 August 2019, is pending resolution on certain final outstanding issues. Hence SIAS cannot be said to support the restructuring agreement at this stage. Instead, SIAS’ support, as set out in our press statement on 21 September 2019, is for the two month extension for the moratorium which Hyflux Ltd is seeking to facilitate negotiations with Utico with a view to finalise and execute the proposed restructuring agreement. If a deal with Utico cannot be reached, the extension would also facilitate Hyflux to pursue discussions with the other interested investors.
Founder, President & CEO
Securities Investors Association (Singapore)