Commentary: Hyflux • Hoping for deal with some form of recovery for all parties

Date: January 12, 2021

First published in Straits Times on 11 January 2021

It’s been a very long wait for the thousands, in fact, 34,000 preference shares and perpetual securities (P&P), and bond holders of Hyflux to see light at the end of the tunnel. It has been some 2.5 years since Hyflux filed for protection in the Singapore courts. It has now been placed under judicial management.

While some creditors have welcomed the court’s decision because they are tired of waiting for Hyflux to find a suitable white knight, many retail investors fear the worst – liquidation. One can’t blame them as judicial management often leads to liquidation, leaving the subordinated creditors completely out of money.

The senior creditors or the unsecured working group (UWG), who were advised by financial advisers Borrelli Walsh, had previously stated in a letter on Oct 15 last year, that they would accept only an offer of 12.5 cents from any investor to continue to support the restructuring. Such a demand would leave other creditors, particularly the P&P holders who are subordinated, with little or no return. It is the hope of the Securities Investors Association (Singapore) or SIAS that a white knight can be found who will satisfy the senior creditors and also allow the P&P holders some returns.

Investigations against the board are ongoing and if these investigations show cause to pursue an action against Hyflux’s board, SIAS will put its weight behind such an action. SIAS hopes that the judicial managers will consider the plight of the P&P holders and act in the interests of all creditors.

We are hoping for a deal that includes some form of recovery for all parties, to be reached for the sake of the thousands of distressed small investors.

David Gerald
Securities Investors Association (Singapore)