Sias wants Hyflux to organise town hall for perpetuals and preference share holders

Singapore

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 on Utico's proposed deal, Mr Gerald wrote.

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

Sias also suggestedthat Hyflux establish an escrow account and place S$1.5 million in it for the Sias adviser's fees.

Mr Gerald pointed out that Justice Aedit Abdullah recently asked Hyflux to consider whether protection for the provision of advice by the Sias advisers - PricewaterhouseCoopers Advisory Services, Drew & Napier, Akin Gump Strauss Hauer & Feld, BlackOak and FTI Consulting - can and should be put in place by the creation of an escrow account.

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 moving forward as the Utico deal is not guaranteed to be completed successfully. Hyflux earlier said that the Sias advisers have been paid about S$2.4 million as at Wednesday.

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

Some PnP ISC members oppose 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 Aqua Munda, Sias noted that PnP holders have not been included in the Singapore-registered firm's proposal. Aqua Munda is inviting Hyflux's noteholders and unsecured creditors to tender offers for their debts to be purchased at a minimum discount of 85 per cent. The deadline for offers to be accepted is April 24.

In December, Aqua Munda said it would "engage with PnP holders through Sias and its advisers as soon as practicable after the close of the invitation".

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 requested 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.

Aqua Munda on Thursday said it will appoint two non-executive directors, including Singapore's non-resident ambassador to Kuwait, Zainul Abidin Rasheed.

Sias also asked Hyflux to disclose whether its directors and legal and financial advisers have an interest in Aqua Munda.

Aqua Munda previously said it will commit S$208 million for its debt buyout offer. Sias asked Hyflux about the purpose of this debt purchase - whether Aqua Munda plans to negotiate with Utico for a better deal or whether Aqua Munda intends to purchase all Hyflux debts and take control of the water treatment firm.

On Feb 28, Aqua Munda 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 whether Hyflux has discussed with Aqua Munda about this working capital facility and the nature of the projects, and whether Hyflux has conducted due diligence and is satisfied with Aqua Munda's proof of funds.

As for the other potential Hyflux investors - Longview International and its Chinese joint venture partner - Sias sought an update on any developments. Hyflux on Feb 19 said Longview and the "major Chinese entity" had sent a letter expressing their interest in investing in the water treatment firm.

"Please also let us know whether any of the Hyflux directors or advisers are related to Longview or its Chinese counterpart," Sias wrote.

In its latest letter, the group again requested confirmation from Hyflux CEO Olivia Lum and other Hyflux board members that they will give up their entitlements for the benefit of other PnP investors under the Utico deal. Hyflux had not answered this question in its Feb 19 reply to Sias.

The investor advocacy group also reiterated its question on whether the Hyflux board, including Ms Lum, will abstain from voting on the Utico deal "to avoid the obvious conflict of interest".