SIAS urges Hyflux to give equal treatment to holders of its perps

Singapore

THE Securities Investors Association (Singapore) on Thursday called on Hyflux to consider according equal treatment to perpetual securities investors.

"It must be recognised that these investors are not on the same footing as institutional investors. They have put their hard earned life savings into this company, trusting the owners and the management to deliver. They must find the way to preserve value for these investors, though it may take time."

SIAS also urged "all parties to refrain from making doomsday statements and allow Hyflux and its professionals to do their best".

Hyflux's securities remain suspended, including its preference shares and perpetual capital securities.

Meanwhile, ESR Real Estate Investment Trust (ESR-Reit) gave an update on its property at 8 Tuas South Lane, where a unit of Hyflux is a tenant.

ESR said the lease represents 6.8 per cent of the rental income of ESR-Reit as at end-March.

The Reit manager said in a Singapore Exchange announcement it believes Hyflux Membrane Manufacturing (S) will likely continue to make rent throughout its reorganisation.

Hyflux Membrane is one of the five subsidiaries that together with Hyflux has applied to the High Court to begin a court-supervised process to reorganise their liabilities and businesses.

"8 Tuas South Lane is currently leased to Hyflux Membrane on two different lease terms, which lends itself well to be multi-tenanted," said ESR-Reit's manager, which has on average three months security deposits for the two leases.

All rental payments by Hyflux Membrane have been prompt since the property was acquired in Dec 2017 and there are currently no arrears due, ESR-Reit's manager said.

It has had discussions with Hyflux and its financial advisers and believes that the property is essential to Hyflux's continued operations, and so rental payments will continue throughout the reorganisation process.

ESR-Reit's manager also said it has been receiving leasing interest and inquiries due to 8 Tuas South Lane's location next to the Tuas Megaport and within an established industrial area.

In October 2017, ESR-Reit entered into an option agreement with Hyflux for the sale and leaseback of the Tuas South property, for an estimated total cost of S$111 million including its S$106.4 million purchase cost, S$3.2 million in stamp duties and S$1.4 million of other transaction costs.

Hyflux uses the property's five detached factories, warehouse facility and four blocks of dormitory buildings to produce membranes and steel structures and house workers.

ESR-Reit units closed unchanged at S$0.51.

ESR believes the property (8 Tuas South Lane) is essential to Hyflux's continued operations, and so rental payments will continue throughout the reorganisation process.