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Starship
Supreme |
12-Mar-2019 14:53
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What does Hyflux&rsquo s amended restructuring plan mean for retail investors? Experts weigh in 12 Mar 2019 06:00AM(Updated: 12 Mar 2019 06:30AM) SINGAPORE: The holders of Hyflux&rsquo s perpetual securities and preference shares will get back slightly more cash under a rejigged restructuring plan, but experts are split on whether the improved terms will be enough to persuade these junior creditors to give the ailing water treatment firm a second chance at next month&rsquo s do-or-die vote. The beleaguered company announced last Friday (Mar 8) tweaks to its debt restructuring scheme, following calls from the Securities Investors Association Singapore (SIAS) to give junior creditors &ldquo a little more&rdquo than the current &ldquo paltry&rdquo recovery rate of 10.7 per cent. By comparison, senior unsecured creditors get a minimum 24.6 per cent return rate. To better balance the interests of all parties, Hyflux proposed that perpetual securities and preference shareholders &ndash a large group of 34,000 people, with a majority being retail investors &ndash will get to share the &ldquo upside &hellip from contingent liabilities extinguishing or expiring&rdquo . Previously, if none of the S$678 million contingent claims materialise, 80 per cent of their compensation &ndash S$93 million in cash and 10.87 per cent of equity to be held in escrow &ndash would be distributed to the senior unsecured creditors. The remaining 20 per cent would be set aside for management payouts. Under the amended scheme, management payouts in cash will be halved and the remaining 90 per cent of cash allocations from extinguished contingent claims will be split &ldquo pro-rata&rdquo between the senior and junior creditors. WHAT IT MEANS Hyflux&rsquo s announcement did not provide any updated recovery rates. Neither did it respond to a request for these figures. But according to analysts from iFast Corp and OCBC Credit Research, the tweaked scheme can help perpetual securities and preference shareholders to claw back more cash, thereby pushing up the overall recovery rate. If none of the contingent claims crystallise, investors could recover as much as 7.5 per cent of their initial investments in cash, up from the current 3 per cent. With the equity portion unchanged at 7.7 per cent, this translates into a maximum recovery rate of 15.2 per cent, said iFast Corp&rsquo s senior fixed income analyst Ang Chung Yuh. In the event that only half of the contingent liabilities crystallises, analysts estimate recoveries in cash to work out to be 4.9 per cent. To be sure, these higher recovery rates will not be an immediate guarantee as they are hinged on contingent liabilities &ndash such as liquidated damages in a construction project &ndash expiring over the course of two years. So what are the odds of that? Again sharing similar views, the analysts from iFast and OCBC Credit Research said a &ldquo significant amount&rdquo of these contingent claims may not materialise if Hyflux is given a second chance. &ldquo Based on the explanatory statement, most of the claims are EPC (engineering, procurement and construction) and O& M (operations and maintenance) projects, which we think are within the company&rsquo s expertise,&rdquo said Mr Ang. For one, Hyflux has received proofs of claims worth S$3.5 billion from 73 parties &ndash a sum that is much higher than the S$2.7 billion laid out in its explanatory statement dated Feb 22. The accurate claim quantum, which the company is expected to clarify by the end of this week, will &ldquo have an effect on the actual percentage recovery&rdquo , OCBC analysts told Channel NewsAsia. With the clock ticking down to the Apr 5 scheme meeting, investment specialist S Nallakaruppan views the latest move as another &ldquo goodwill gesture&rdquo to sweeten the deal for minority stakeholders. But OCBC analysts reckoned that uncertainties remain when it comes to whether junior creditors will now find it easier to accept the restructuring plan. For one, the proposed recoveries under the amended scheme remain small. &ldquo It is even smaller if only the cash portion is considered." With equity forming a significant part of the recovery terms, there also remains &ldquo insufficient information&rdquo , such as the company&rsquo s income and cashflow projections, for proper assessment of the value of the allocated equity. In addition, &ldquo satisfactory clarification&rdquo have not been given on several issues and some investors could feel that &ldquo answers may become clearer by rejecting the scheme&rdquo , added OCBC Credit Research. For example, national water agency PUB, which issued a default notice to Tuaspring last week, has not disclosed the compensation amounts if it takes over the Tuaspring plant. &ldquo We cannot rule out junior creditors preferring liquidation, which results in Tuaspring being taken over by PUB per the notice of default, if there is a possibility that PUB will offer a high compensation amount," analysts said. Another burning question that continues to linger on investors&rsquo minds is what went wrong with the company&rsquo s books between March and May 2018. &ldquo When the 2017 accounts were done and issued in March, the auditors didn&rsquo t mention any issues but shortly two months after, the company said there were issues and they had to go for a court-supervised reorganisation,&rdquo noted Mr Nallakarappan, who sits on the executive committee of The Society of Remisiers (Singapore) as its honorary treasurer. &ldquo What happened? These are fundamental questions that need to be answered.&rdquo https://www.channelnewsasia.com/news/business/hyflux-amended-restructuring-plan-retail-investors-experts-11332168 |
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ysh2006
Supreme |
12-Mar-2019 07:19
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Go to NTUC auditorum lah...charge $1500 per hour cheap cheap!!...
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beidou
Member |
11-Mar-2019 23:58
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Can someone please advise whether notice for meeting with unitholders has been sent out by Hyflux? | ||||
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Stephenchow
Veteran |
11-Mar-2019 22:49
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BELEAGUERED water treatment company Hyflux has called off Wednesday' s town hall meeting on its restructuring, citing space constraints at the original venue, in an announcement late on Monday night. The third round of meetings, for holders of its notes, perpetual securities and preference shares, was to have been held at its Hyflux Innovation Centre in Bendemeer Road on March 13 at 7pm. But " due to the large number of holders of the securities who have indicated that they wish to attend, the company considers it necessary to arrange for a larger venue to conduct this town hall meeting" , Hyflux has now said, in an update to its Feb 27 announcement. It added that it will announce the new time and venue of the meeting " as soon as possible" . Hyflux recently unveiled plans to tweak its debt restructuring scheme and give disgruntled retail perp and pref holders a higher recovery rate on their original investments, after they pointed accusing fingers at the minimum recovery rate promised to senior unsecured creditors. Ahead of a do-or-die creditors' vote between restructuring and liquidation on April 5, retail investors have filed proofs for a hefty share of the S$3.51 billion in claims being made against Hyflux.
Holders of the S$500 million, 6 per cent perpetual securities have filed S$540.7 million of claims, while holders of the S$400 million, 8 per cent preference shares filed claims worth S$429.3 million. Greater clarity on the sums being claimed is expected after adjudication on Saturday. |
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MichaelSchenker
Master |
11-Mar-2019 22:37
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Just curious, care to share which structured deposit or products endorsed by which bank lost money for the past 3 years? Are you able to make them and share with the members here? Shroeder, Allianz, JP Morgan.........etc, etc.......Which one? So that some of us can tally up.
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like2learn
Veteran |
11-Mar-2019 22:06
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Also ang bao, I think some pple feel very good when they can give out premier banking ang bao(although inside money still standard rate) ... well, there' s no free lunch - if the banks treat u to free food, etc, i guess they also expect u to buy more pdts from them. in the end, lose more $. The funny thing is there is no lack of pple going after all these priviledge banking stuff even after lehman, hyflux, etc financial pdts .... " status" is a very seductive thing i guess. |
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kerier
Veteran |
11-Mar-2019 21:25
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Can?t hit target, got promoted, change jobs etc. definitely not fun selling these products but it brings good income without the risk of lending money.
It?s nice mah to get upgraded to privilege and get better treatment, go to lounge eat free drink free. Then they can sell you more.
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like2learn
Veteran |
11-Mar-2019 21:04
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I am wary of banks' pdts personally i feel the person selling just want to hit quota / earn commission. The turnover is v high, the person selling the pdt may not even be around within a year. But I see quite a number of old money(older generation/retirees) joining those privilege/premier/" wealth mgmt" banking services . |
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kerier
Veteran |
11-Mar-2019 18:29
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yeah, everything has their own risks.. even banks and cpf. just have to adult up and assess yourself and not blame others when things go wrong. unless of course if there was mis-selling involved.
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Qanghoo
Supreme |
11-Mar-2019 17:58
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Whatever the bks sell carry some risks, some of which even the bks themselves might not foresee.
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kerier
Veteran |
11-Mar-2019 16:12
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even if you invest in the bluest of chips, you must also be dilligent enough to monitor its financials, announcements and market conditions so forth. otherwise just buy those structured deposits or whatever crap the bank sells.
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Starship
Supreme |
11-Mar-2019 15:50
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From our world-famous Donovan.............................  " Hyflux: It has landed into trouble per my reiterated fore-warnings of 2016 (Part 2). In that special May 2016 analysis, I had even used logic analysis forewarning of the fishy point -- Hyflux issuing $300mil perpetual bonds at 6% rate that would be increased to $500mil if it was oversubscribed. There were so many fools then. Why did it not borrow cheaply from banks since prevailing interest rate was much lower in 2016. Secondly, if interest rates rise, it would have to raise money at 8%-10% to attract the same batch of fools. The final conclusion of the 2016 fishy point: The company was desperate to get money at any bad costs (6%). That was an initial sign of 【 desperation and distress】 , and【 It all turned true to my logic】 . It shows analysing market in street smart way is way more important that in academic way." https://www.facebook.com/donovan.ang.5 |
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batambird
Member |
11-Mar-2019 14:32
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Yes. Blue chips like starhub, singpost, NOL, SPH, sembmarine, noble and many more. So you can see your money disappear at a slower pace. If u want to lose even at a slower pace invest in the bank stocks. O
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investshare
Supreme |
11-Mar-2019 13:15
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i believe most investors got conned some points in the investment journey, but just be mature enough to reflect and learn the lesson, rather than blaming everyone and cry for bailout.
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Starship
Supreme |
11-Mar-2019 10:23
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MichaelSchenker
Master |
10-Mar-2019 22:14
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Those who wanted a government -backed (read: Very safe) should go look up Singapore Savings Bond. Interest range from 1.96 to 2.49% pa |
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mrscoop
Member |
10-Mar-2019 19:15
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during periods of low interest rates, " 6%" translated into layman term = " high risk! high risk! run as far away as possible!!"
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Stephenchow
Veteran |
10-Mar-2019 18:36
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True, also need to know the companies well and have holding power.
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ysh2006
Supreme |
10-Mar-2019 14:21
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Aiya she gave 6% as bait mah if not less people get hook lah...
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Starship
Supreme |
10-Mar-2019 11:13
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