Hyflux rebuts SM Investments statements over whether material information was withheld

Singapore one dollar bill

Troubled water infrastructure player Hyflux disputed in strong terms on Saturday allegations from its white knight investor SM Investments that material information was withheld.

SM Investments has claimed that the new material information suggests Hyflux’s working capital requirements would be significantly higher that it expected; the investor now disagrees with Hyflux’s plan to allocate the investment, and said it planned to review the allocation, which would affect the amount used to settle with creditors.

However, on Saturday, Hyflux denied the allegations in no uncertain terms.

“The company did not withhold material information from the investor. Information had been provided promptly as and when requested by the investor,” it said in a filing to SGX. “The company was surprised by this sudden position taken by the investor.”

Hyflux added that SM Investments’ objection to the cash settlement figure, made for the first time on 7 March, around three weeks after the information was published, relies on information provided in early January.

Hyflux said SM Investments was not only kept informed of developments this year as they occurred, it made no objection to the terms throughout January and February; the plan was published on 16 February, Hyflux said.

“The investor’s representative had attended the 21 February 2019 hearing where the terms of the schemes, based on the agreed economic terms, were presented to the court,” Hyflux said.

“Despite queries posed by the company, the investor has not actually explained how any of the information it has sought to rely on would
necessitate a ‘revision’ of its assessment of the working capital needs of the company (much less state what this revision actually is),” Hyflux added.

SM Investments had pointed to a 1 March affidavit from Hyflux CEO and founder Lum Ooi Lin Olivia related to a S$916.5 million impairment loss for the first nine months of 2019 as reason to re-assess working capital needs.

But Hyflux said it provided SM Investments that affidavit on 1 March, when it was executed.

“Moreover, the company had subsequently written to the investor to inform the investor that such impairment loss only concerned accounting treatment and had no impact on actual working capital needs. The investor has not disagreed with this,” Hyflux said.

In a statement on Friday morning, Hyflux had said it viewed the restructuring agreement as still in force and that SM Investments had not said it planned to abandon the deal.

In October, SM Investments, which is a consortium of the Salim Group and the Medco Group, entered a binding agreement to invest S$530 million for a 60 percent stake in Hyflux, which had filed for court protection in May. Hyflux said that the oversupply of gas in Singapore’s market had resulted in depressed electricity prices, which hit earnings in 2017 and drove losses in the first quarter of 2018.

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