Friday, November 22, 2019

What happened to Hyfluxshop?

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.

Unbeknownst to many except the unlucky ordinary shareholders of Hyflux and probably those who are interested enough, the now private company of Hyfluxshop has changed their name to Multi Water Holdings Ltd. Lately in November 2019, Multi Water Holdings undertook a rights issue.

A Brief History of Hyfluxshop to jolt one's memory in case one forgets easily. 

Hyfluxshop used to be under Hyflux but through a dividends in species given to shareholders in February 2018, before the court protection to protect Hyflux from creditors in May 2018, Hyfluxshop became a private company. This resulted in Olivia Lum, who is the largest shareholder in Hyflux, having direct interest of 23.8% and deemed interest of 30.4% of Hyfluxshop, representing a total control of 54.2%.

Almost immediately in February 2018, Olivia Lum next offered to acquire the Hyfluxshop shares from other shareholders at $0.1783 a share, valuing Hyfluxshop at $20 million, given that there were a total of 112,183,566 Hyfluxshop shares. As of April 2018, Olivia Lum's direct interest became 45.7% and deemed interest of Hyfluxshop remaining at 30.4%, representing a total control of 76.1%

On November 2019, under the new name of Multi Water Holdings Ltd, one rights share for every one existing ordinary share was announced at $0.087 per rights share. This rights issuance was up to 115,867,780 new ordinary shares, making the total Hyfluxshop shares to 231,735,560 if all new ordinary shares are issued. Olivia Lum provided an irrevocable undertaking to take up in full her share of allotment of 51,332,944 new ordinary shares which would cost her $4.5 million.

The astute reader will find something amiss with the figures above. Between February 2018 to November 2019, the total number of Hyfluxshop shares increased from 112,183,566 to 115,867,780. I couldn't find any information announcing this increase in total shares since the only announcment between February 2018 and November 2019 is the financial statements 2018 which states that that no shares or options were granted. 

So What Could Be The Most Likely Outcome?

The holders of Hyfluxshop shares are mainly Hyflux and Hyflux ordinary shareholders. It is very unlikely or rather impossible for Hyflux to subscribe to the rights given it is under court protection and already having no money to pay its creditors. It is also very unlikely ordinary shareholders would have the mood to pump in money, given they are already nursing a loss and besides Multi Water is under a loss position of $30 million  based on its latest 2018 financial statements. 
So what will be the most likely outcome?

Olivia Lum's control of Hyfluxshop has increased steadily from 54.2% to 76.1% ( or 73.73% due to mysterious ballooning of  total shares) to 81.8% or possibly 86.9% of Multi Water Holdings, a private company, beyond the reach of the creditors of Hyflux.

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
40)How Effective are SGX Listing Rules Really ? - Hyflux
41)The Liquidation of California Fitness and the case of Hyflux
42) Protection of Retail Investors in Singapore - Hyflux and Noble
43) Spotlight on Singapore Regulators
44) Lehman Bonds are No Hyflux Bonds- An Opinion

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