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23 Feb 2019
Prime Minister Office
Negative View - 811
Delay by PUB in responding to Hyflux caused massive losses

An investor who followed the development in Hyflux closely asked me to point out the problem in getting a fair value for Tuaspring. The bidder needs to get approval from the Public Utilities Board (PUB) to have access to the confidential information needed for their due diligence. The approval took a long time. Finally, only 8 parties were interested to be pre-qualified and PUB only approved two parties. This has caused the value to be so low.

The outcome is quite unfair to the retail investors of Hyflux. They stand to lose 90% of the total sum of $900 million that they had invested in the preference shares and perpetual securities. 

The below are the exact statements by Hyflux, given in the affidavit.
  1. The effort to divest Tuaspring started in January 2017.
  2. DBS and CICC Bank were appointed as advisors for the divestment exercise.
  3. By August 2017, more than 50 parties had indicated an interest in Tuaspring and had been provided access to the information memorandum concerning Tuaspring following written approval to disclosure being received from PUB. This information memorandum provided high level information on the asset.
  4. As a result of this exercise, the company received several preliminary non-binding bids, all of which were subject to agreement on the investment structure, regulatory and other approvals, and completion of detailed due diligence. Three of these indicative bids attributed an enterprise value of S$1.4 bn to the Tuaspring project. These came from a PRC SOE, a private UAE party and a subsidiary of a Singapore listed company.
  5. However, these numbers were not final but subject to various conditions, investment structures and further due diligence.
  6. To conduct further due diligence (which required obtaining access to more confidential information relating to Tuaspring) and to make a binding offer, an interested party needed to be approved by PUB to be granted access to such confidential information.
  7. By May 2018, none of these parties had completed their due diligence processes, and the time required to complete such due diligence and receive an offer was likely to take a much longer period of time. With the weak electricity market not likely to recover in the near term, the Group will continue to suffer losses. As such, Hyflux decided to commence a transparent financial reorganisation supervised by the High Court of the Republic of Singapore.
  8. The effort to divest Tuaspring continued in July 2018 through a collaborative sale process with the sole secured bank lender, Maybank.
  9. Of the parties that had expressed an interest previously, only 8 requested to be pre-qualified by PUB.
  10. Of the 8 parties, only 2 local parties were pre-qualified by PUB, of which 1 submitted a conditional bid in early October 2018.
  11. This conditional bid would have been insufficient to repay Maybank.
Vote (agree, disagree): the delay by the PUB in approving the release confidential information to potential bidders has affected the chance of getting a better value for Tuaspring. 

Agree: 46  Disagree: 1  Vote