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Sias proposes Hyflux PnP town hall, S$1.5m in escrow for adviser fees

THE Securities Investors Association (Singapore) or Sias has invited Hyflux to organise a town hall with retail holders of its preference shares and perpetual securities (PnP), to better understand and respond to the investors’ concerns and queries.

In a letter to the troubled water treatment firm, Sias president and chief executive officer (CEO) David Gerald proposed that a town hall be convened between March 11 and 17.

Thereafter, the investor advocacy group and its advisers will hold small group meetings with the PnP holders to continue discussions with them on Utico’s proposed deal, Mr Gerald wrote.

Sias requested that Hyflux be responsible for all costs incurred in organising the town hall.

It also suggested Hyflux to establish an escrow account and place S$1.5 million in it for the Sias adviser’s fees. Mr Gerald pointed out that the judge recently asked Hyflux to consider whether protection for the provision of advice by the Sias advisers can and should be put in place by the creation of an escrow account.

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Sias clarified on Thursday that the outstanding fees of its advisers have not been fully paid, and there is no assurance they will be paid as the Utico deal is not guaranteed to complete successfully.

In the letter, Mr Gerald relayed more queries and comments from the PnP informal steering committee (ISC) members, on top of those sent in its Jan 13 letter.

This includes the opposition by some PnP ISC members to the releasing of claims against Hyflux directors once the Utico scheme becomes effective. Sias thus urged Hyflux to reconsider its position on this matter.

It also requested Hyflux to provide, and to request Utico to provide, evidence to “give comfort” to the PnP holders that the deferred payment obligations under the proposed scheme are sufficiently provided for. This comes after Hyflux said on Wednesday that it had instructed its lawyers to reach out to Utico’s legal advisers to obtain further financial information on the Utico entities.

On potential Hyflux investor Aqua Munda, Sias noted that PnP holders have not been included in the Singapore-registered firm’s proposal.

A PnP ISC member asked: “What is the proposal to the PnP holders? Why can’t Aqua Munda disclose the proposal to PnP holders upfront, together with the proposal to the senior unsecured creditors?”

Sias also asked Aqua Munda to disclose who is behind the company, whether it has sufficient funds to see through a rescue package that can address all creditor classes, and what plans it has for Hyflux.

Sias requested Hyflux to disclose whether its directors as well as its legal and financial advisers have an interest in Aqua Munda.

In January, Aqua Munda said it will commit S$208 million to buy eligible debts and contribute to Hyflux’s working capital requirements. Sias asked Hyflux about the purpose of this debt purchase – whether Aqua Munda plans to negotiate directly with Utico for a better deal or whether Aqua Munda intends to eventually purchase all Hyflux debts and take control of the water treatment firm.

On Feb 28, the potential investor also said it is prepared to discuss the provision of a working capital facility of up to S$100 million to Hyflux, for a pipeline of projects in the Gulf Cooperation Council countries, North Africa and South-east Asia.

Sias asked Hyflux whether it has discussed with Aqua Munda about this working capital facility and the profile and nature of the projects, and whether Hyflux has conducted due diligence and is satisfied with Aqua Munda’s proof of funds.

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