Sias urges Hyflux to chase Salim- Medco for updates on rescue deal

Singapore

FIRST came a default notice from the national water agency, followed by an announcement that Hyflux's scheduled townhall meetings with retail investors would be postponed indefinitely.

Then potential investor Salim-Medco asserted its right to back out of a crucial rescue deal for Hyflux last week, but both sides have gone silent on what happens next.

That's thrown the fate of Hyflux into uncertainty, and retail investors want to know what Salim-Medco is planning, the Securities Investors Association (Singapore), or Sias, said on Monday.

Sias chief David Gerald wrote in an open letter to Hyflux: "Can the board advise that Salim-Medco's proposal is still on the table and that they have not given any reason to withdraw from the agreement."

He added: "The recent PUB statement that they should not use its default notice as a reason to walk out is causing worry to retail investors. There is no other option on the table. The company is not giving confidence to investors that it will resolve all outstanding issues to keep the restructuring deal with Salim-Medco on track."

Mr Gerald told The Business Times that Sias has received hundreds of calls from small investors who are anxious and confused: "There is much confusion about whether Salim-Medco is in or not. Tell us, is Salim-Medco in or not?"

Mr Gerald noted that as of now, Hyflux has not said that the scheduled scheme meeting on April 5 is cancelled. But Hyflux must apply to the Singapore High Court first if it wants to delay the vote.

Neither has Hyflux issued a revised scheme document to incorporate amendments it agreed to make on March 8, that would allow retail perpetual and preference shareholders to share in more upside in the proposed restructuring.

With just days to go before April 5 next week, there is no certainty that Salim-Medco's S$530 million rescue plan proposed last year is still on the table, and no clarity over what happens to investors if the deal is dead.

Mr Gerald wrote to Hyflux: "Could the board address all the above concerns immediately, please."

A lawyer for Salim-Medco said he was not allowed to talk about the deal when phoned by BT on Monday.

Many retail investors have cried foul over Hyflux's insolvency. One group has planned a gathering at Hong Lim Park on Saturday from 3pm to 4pm, to protest the Salim-Medco deal and call on the authorities to look into the issue.

The water treatment firm had issued S$900 million preference shares and perpetuals to retail investors in 2011 and 2016 to fund its doomed Tuaspring project and pay off other perps.

DBS was the sole lead manager for both issuances.

Alex Leong, a pref shareholder, said he had obtained the required permit from the National Parks Board to host the protest.

READ MORE: Letter to the Editor: It's time for a close look into why Hyflux tanked