Hyflux's liquidation a sad day for corporate Singapore

THE judicial managers of Hyflux have applied for the water treatment company to be liquidated. Their success would mark an end to one of the most long drawn out, controversial and unfortunate chapters in Singapore's corporate history.

The case extends more than three years - back to May 2018 when the company first announced it was in trouble and applied for court protection to restructure its debts.

The court granted several debt moratorium extensions, often at the eleventh hour. After almost three years however, even that patience ran out.

In October 2020, Justice Aedit Abdullah granted one last extension but observed that "suspicion is building up considerably whether there is some sort of gamesmanship going on here".

Hard questions have rightly been asked about Tuaspring, the billion-dollar integrated water and power project that was the centrepiece of Hyflux's ill-fated diversification into electricity production.

Was proper due diligence performed? Was an exhaustive risk assessment conducted? How many directors voted in favour or against the move? Were investors adequately informed of the risks?

Answers to these and many other similar questions may be forthcoming once an official probe, launched in June 2020, is completed.

Unfortunately, some 50,000 retail investors are affected and will probably lose their entire investment.

Included in this figure are 34,000 preference and perpetual (PnP) holders whose S$900 million was used to partially pay for Tuaspring.

Adding to the pain suffered by these investors, large sums have been paid to various advisers who promised but failed to secure white knights for Hyflux.

While such supposed saviours did emerge, none were able to table a viable and equitable restructuring plan.

It is disappointing that the company is to be wound up and PnP holders are unlikely to recoup anything.

It is hoped, however, that the Hyflux saga will serve as a lesson for directors who fail to observe their responsibility - and they can be sure that they will be hauled to accountability.

• The writer is founder, president and chief executive of the Securities Investors Association (Singapore)