Sunday, March 10, 2019

The Wrong Impression of the Revised Offer - 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.

I think i have to correct the wrong impression that some people may have: that PnPs and unsecured banks/MTNs are sharing on a pro rata basis any of the upside that will happen if contingent liabilities were to be extinguished.

A short answer is there is some sharing going on. But actually its a NO. It is not on a prorata basis.

In my opinion, i think it can be quite misleading and many of the PnP mom and pop investers, especially the Pioneer or Merdeka generation may actually believe they are sharing with the unsecured banks on a prorata basis, making it seem fairer and hence making a wrong decision.
  • The percentages % stated below are all based on the cash component held in escrow account as a standby for the contingent liabilities only. However, the amount held in escrow account as a standby for the contingent liabilities comprises of both cash and shares and not cash only.
ScreenShot of the letter via email to SIAs Chief. This was shared in Telegram by an anonymous poster

My best-effort infographics ( Note: I am not a financial advisor)
  • Regarding the reduction of 20% to 10% for the management payout recipients. As in the letter above, the %percentage is again based on the cash component. This means the project leaders who are taking these incentives are not giving up half of their incentives.Instead, the management payout recipients got 72% ( 23.9/33.2 times 100%) of what they got originally , instead of half which many people thought instead. Read how this mainstream media writes about this. I think it gives a wrong impression, in my opinion.

My best effort Infographics ( Note: I am not a financial advisor)

  • When the letter writes "pro rata basis" between Unsecured Scheme Parties and Debt Securities Scheme Parties, this pro rata isn't pro rata actually. It depends on what is categorized under these two Parties. Now that contingent liabilities that are extinguished are to be shared among these two parties BUT these contingent liabilities are categorised under Unsecured Scheme Parties to enlarge their base.  I reiterate again that contingent liabilities are not actual claims as they may not even happen at all. These contingent liabilities should not have been classified under Unsecured Scheme Parties in the first place at all because it "artificially" inflates their share of the extinguished contingent liabilities, from 53% to 65% and reduces the share for the Debt Securities Parties (PnPs) from 47% to 35%.
My Thoughts

I think its very unfortunate that a simpler way of providing the information was not given. It may also be construed by some skeptical people that it is meant to mislead the more helpless ones to think that this is even near to a fair deal at all. I think i will give Hyflux the benefit of the doubt.

 A much simpler way of presenting these scheme has to be shown. This is important as the bulk of the target audience 34,000 of them have many many pioneer and merdeka generations among them. It is already a challenge to read in english or read at all given their poor eyesight for many of the chinese educated ones. To be honest, i have immense difficulty reading and understanding the letter too and had to re-read it many times and i am not a financial advisor.

I urge greater clarity from Hyflux with simplified terms so that many of the 34,000 can make an informed choice on the 5th of April .
I wonder why they planned it on Qing Ming Festival a.k.a Tomb -Sweeping Day,.
Maybe, it's a sign.

For PnP and MTN holders who wants to vote NO but are unable to attend the voting on 5th April 2019. You can fill up this form to proxy others. This has to be done by 31 March since 2 April is the deadline to give the forms to Boardroom, a Corporate Secretarial Company and some leadtime is necessary for the volunteers. 


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
25)Where to find money to pay back retail investors? 
26)What happened at Hyflux's Second Townhall Meeting
27) Another bomb to the retail investors of Hyflux
28)The Underrated Importance of Regulatory Risk - Hyflux
29)The Overlooked Importance of Another Regulatory Risk - Hyflux
30)Why did so many Singaporeans invest in Hyflux - The positive image illusion
31)On Why The Rich Get Richer And Poor Gets Poorer - The Hyflux Proposal is Out!
32)The " not spoken much" dirty little thing about the Restructuring Proposal - the $33 million - Hyflux
33) The Failure of the much touted Public-Private-Partnership Model in Singapore - Hyflux

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