Where to find the money to pay back retail investors?- Hyflux

Disclaimer: I am not an investment advisor. Heck, i am not even working in the financial industry. Below are my interpretation and i am grateful if you will let me know if anything i say is wrong and i will correct it in a reasonable time. I am not an expert and don't wish to be assumed to be one. I make losses frequently.

If you are still unaware, a telegram group consisting of Hyflux retail investors has been set up to facilitate communication. One can sense the frustration of retail investors from the messages posted. Every now and then, there are people who would offer good insights into what is happening. With such a long wait for the outcome and lack of concrete updates from the investor relations, it is little wonder that speculations are rife. Some even commented that since Hyflux doesn't seem to have much money, is it possible to claim from the professional indemnity insurance of the board of directors, advisors, e.t.c.

I received some questions from an anonymous member of the telegram group which i thought is good to share. These questions can be asked in the upcoming Townhall meeting on 18 January (Friday) and no, i did not email the Hyflux investor relations nor SIAs about these questions.

Question 1

Reference to your FAQ on your website, it was mentioned there was no default, no legal demand and that the filing was voluntary to proactive protect all stakeholders. If this was what your external advisors advised, should the outcome of this exercise result in significant cut or total wipe out of pref and perp value as compared to the last traded price, will management and BOD be willing to support stakeholders in making claims against your advisors since you have probably been misled into thinking that this is the best course of action? It is like you having a flu with slight fever of 37.2, your doctor prescribes a very strong antibiotic and after taking, you have an allergy reaction and went into coma. Wouldn’t the doctor be negligence since the risks probably outweigh the benefits?

Relevant article

https://www.hyflux.com/financial-reorganisation-exercise/shareholders-and-holders-of-securities/

Question 2

As per Singapore Standard of Auditing (SSA) 570 pertaining to going concern, auditor is supposed to assess company’s forecast over the next 12 months for the continual use of going concern assumption. With the company entering into a scheme within 5 months from the last financial year end date and 2 months from the audit report signed off date, what is the current status for the 2017 audit report. Is auditor affirming to their 2017 report or have the report been withdrawn? (Personal note, no need to ask HF – Shouldn’t ACRA, the regulator governing auditors start an audit on KPMG’s working paper too?)

Relevant article

https://isca.org.sg/media/777078/ssa-570-revised-july-2015.pdf

Question 3

In the first town hall meeting, it was mentioned that water contributes only 10% of TS revenue (Summary of the meeting at below link). Page 138 of the 2017 annual report, under discontinued operation put TS external revenue at S$174m. So, it is right to assume revenue from water is only S$17m in 2017?

Relevant article

https://secure.fundsupermart.com/fsm/article/view/14296/six-takeaways-from-hyflux-s-first-round-of-townhall-meetings

Question 4

According to announcement dated 11 April 2011, first year selling price per cubic of water to PUB was set at S$0.45. In view of this, should TS be making at least 0.45 x 318,500 x 365 days = S$52m from water sales annually?

Relevant article

http://investors.hyflux.com/newsroom/20110406_123709_600_40E33ED3154E853A4825786A00141CB4.1.pdf

Question 5

When is the date whereby TuasOne faces liquidated damage from delays in commencing operation and how much will the liquidated damages be?

Question 6

Noted that TuasOne has a 25 years deal with NEA, can you reveal the daily contracted incineration capacity? Do you have a committed 3600 tonnes per day from NEA? If not, what is the tonnage committed and for how long?

Question 7

Have the company done an impact assessment on the future incineration demand given the following factors?

- NEA reported daily solid waste at around 8443 tonnes a day and with the new TuasOne, a total of 3600 tonnes per day capacity will be added to the whole of Singapore. 

- Sometime around 2025, a new integrated waste management facility will come online in Tuas with incineration capacity of 5800 tonnes per day. And

- Singapore is targeting a recycling rate of 70% by 2030 and what if this target is overshoot

How does the above impact TuasOne in securing enough waste for running the WTE plant at high capacity level?

Relevant articles 

https://www.nea.gov.sg/our-services/waste-management/overview

https://www.straitstimes.com/singapore/environment/2-green-plants-to-improve-waste-treatment-efficiency

https://www.mewr.gov.sg/ssb/our-targets/resource-sustainability/domestic-recycling-rate

Question 8

During 2011, why HF did not enter into vesting contracts with the government and locked in the electricity selling price whereas most of the additional capacity are thought to have been build basis on LNG vesting contract? 

Relevant article 

http://singaporepowerdesk.com/loss-making-power-generation-sector-in-singapore-requires-bold-steps/

Question 9

What is the value of the power generation assets in Tuaspring? Alternatively, are you able to reveal the total price paid to Siemens? Back in 2011, industry sources have been quoting a figure of around US$500m for the power portion. 

Relevant article

https://www.eco-business.com/news/hyflux-in-talks-over-tuaspring-power-plant/

Question 10

With 90% of TS revenue coming from power generation, does entry into power generation constitute major transaction which require shareholders’ approval? Did the company obtained shareholders’ approval prior, and If not, why is it so? 

Under SGX Practice Note 10.1, 3.2.2 states that “However, should the acquisition change the risk profile of the issuer, shareholders should have an opportunity to have their say on the proposed acquisition. This is so notwithstanding that the acquisition will not change the main business of the issuer. Acquisition of the power turbine from Siemens forms a substantial part of the group assets and will change the risk profile of the group as exhibited by the current dire situation largely caused by exposure to the electricity market. 

http://rulebook.sgx.com/en/display/display.html?rbid=3271&element_id=5634&print=1

Further reading

1) Considerations about Hyflux
2) The fate of Hyflux
3)Will Hyflux recover? The billion dollar question
4) Hyflux-Treatmeat of perpetual share holders- Ezion
5) Hyflux - loans and borrowings - Pacific Radiance
6)A happy ending for retail perpertual securities holders - Tiger Air and Hyflux
7) The Very Curious Case of Sharebuybacks- Hyflux
8)What did the founder/Chairwoman/CEO do to help hyflux throughout the years
9) Moving forwards at the Townhall meetings with Hyflux - Part 1
10) Moving forward at the Townhall meeting with Hyflux - Part 2
11)The Lucky Accredited Investors of Hyflux's Perpetual Securities - Part 3
12) The Peculiar Case of HyfluxShop - Question 12 
13)Uncovering the Real Motivations Behind the HyfluxShop 
14) High Level Staff Movement Indication of Red Flags -Hyflux
15)An industry comparison of Hyflux compared with its peers - Question 15
16)What other Water Companies did that Hyflux didn't - Question 16
17)Why a debt to equity option for retail investors is not right
18) Consolidated Questions For Hyflux Townhall Meeting on 19 and 20 July 2018 - Hyflux
19)Consolidated Questions For Hyflux Townhall Meeting on 19 and 20 July 2018 - Hyflux- continued
20)Informal Steering Committee for the Reorganisation Process - Hyflux
21) What happened to other Debt Restructuring Exercises - Ausgroup
22)What happened to other Debt Restructuring Exercises - Nam Cheong
23) My layman views of the so-called " White Knights of Hyflux"
24) The Unsecured Working Group (UWG) are against the retail investors - Hyflux