There was no form of ‘impropriety’ found in DBS’ arrangement of the sale of perpetual securities by Hyflux in 2016, said the Monetary Authority of Singapore (MAS).
Responding to Bloomberg‘s queries, MAS added that DBS Group Holdings Ltd. had acted in compliance of regulatory requirements as both manager and distributor of the perpetual securities.
“As the issue manager, DBS conducted due diligence checks to ensure that material information relating to Hyflux was highlighted in the offering document,” added the Authority.
For example, MAS highlighted that DBS had reminded its investors to read the disclosure documents thoroughly before making and submitting their applications while the bank distributed the bonds via its automatic-teller machines.
“All investments carry risks,” the MAS said, adding: “The deterioration in Hyflux’s financial conditions that led to losses for investors illustrates this.”
Hyflux, drowning in S$2.7 billion in liabilities as of the end of Sep last year, has given up on a “$380 million rescue package” from the Salim-Medco Group consortium, which was offered “in exchange for a 60% stake” in the water treatment company, as a result of the termination of the bailout deal with SMI.
The company reassured its shareholders earlier this month that it will “relentlessly pursue all other viable strategic opportunities” in line with its court-supervised restructuring plan.
“The company intends to work closely with the key creditor groups and relevant stakeholders to find mutually acceptable bases to enable the company to pursue such alternative opportunities,” Hyflux said.
In the meantime, Hyflux will continue to exert ownership over the Tuaspring plant, and will likely make an appeal to the High Court in a bid to extend its time to find a new potential white knight.
However, an extension of Hyflux’s debt moratorium beyond 30 Apr is dependent on whether the High Court could find “strong reasons” that demonstrate the firm’s capacity to avoid liquidation and provide its creditors with a better alternative.
“There can be no assurance that the company will be successful in securing a new investor or in finding a viable alternative to execute the restructuring,” Hyflux said.
Securities Investors Association Singapore (SIAS) chief executive officer David Gerald told The Straits Times that he has contacted Hyflux founder Olivia Lum as to whether the firm has a backup plan or safety net for its stakeholders.
Mr Gerald said: “According to her, the board will quickly re-engage with previous interested parties who had shown keen interest and were bidding for Hyflux with SMI.
“She said that the board needs some time to negotiate with interested parties and has asked that they be given some time and space to work on an alternative proposal to avoid liquidation,” he added.