The Commercial Affairs Department (CAD) of the Singapore Police Force, the Monetary Authority of Singapore (MAS), and the Accounting and Corporate Regulatory Authority (ACRA) have launched a joint investigation into Hyflux and its current and former directors for suspected false and misleading statements, breach of disclosure requirements, as well as non-compliance with accounting standards.
The authorities said on Tuesday (2 June) that the investigation was launched after a review of Hyflux-related disclosure and compliance with accounting and auditing standards that was announced in April last year, upon which they discovered reasons to suspect that offences may have been committed.
According to the authorities, the review was an extensive exercise covering the announcements and financial statements issued by Hyflux over a period of eight years, between 2011 and 2018 inclusive.
“The investigation will ascertain whether there were lapses in Hyflux’s disclosures concerning the Tuaspring Integrated Water and Power Project (Tuaspring IWPP), as well as non-compliance with accounting standards between 2011 and 2018,” the authorities said in their statement.
As part of their investigation, the authorities stated that they have obtained accounting and other corporate records from Hyflux and its subsidiary Tuaspring, adding that Hyflux’s directors and key officers involved in Tuaspring IWPP have also been interviewed.
Speaking on the time needed for the full investigation, the authorities noted that an update will be provided when there is an outcome, given that the time needed to complete the investigation is subject to several factors including offence period and complexity of issues.
They added that they do not intend to interfere Hyflux’s current reorganisation plans with the criminal investigation.
“The investigations are not intended to interfere with Hyflux’s current reorganisation plans as they focus on determining the role of the subjects in the alleged disclosure lapses and non-compliance with accounting standards between 2011 and 2018.”
Responding to this issue, Hyflux in a bourse filing on Tuesday, stated that the authorities have sent a notice to the company, requesting it to provide certain information and documents relating to the Tuaspring desalination plant.
Hyflux noted that it will make further announcements as and when there are any updates, adding that the company is “presently assisting and will cooperate fully with CAD in its investigations”.
It is believed that those who served as board of directors during the period between 2011 and 2018, including company’s executive chairman Olivia Lum, will be under investigation.
High profile debt restructuring of Hyflux
The Tuaspring desalination plant, which is part of Hyflux’s Tuaspring IWPP project, was the largest seawater treatment plant integrated with a power generator in Singapore that supplies 70 million gallons of treated water per day for 25 years.
Costing Hyflux S$1.05 billion, this project was taken over by Singapore’s national water agency Public Utilities Board (PUB) last year after PUB terminated its Water Purchase Agreement (WPA) with Hyflux – due to the company’s financial debt.
In March last year, it was reported that around 500 people went to Hong Lim Park to protest against Hyflux after losing 80 to 97 per cent of their life savings and retirement funds invested in Hyflux preference shares and perpetual securities.
It was estimated some 34,000 retail investors had invested a sum of around S$900 million dollars in Hyflux preference shares and perpetual securities offered via two tranches in 2011 and 2016.
Furthermore, outstanding notes are also due, which amount to S$100 million (4.25 per cent) in 2018, S$65 million (4.6 per cent), and S$100 million (4.2 per cent) in 2019.
Hyflux had also called for its creditors to file proofs of claim, allowing the creditors such as trade creditors and bank lenders to receive payments as well as to vote on the scheme proposals during the scheme meeting with UAE utility company Utico in April 2019.
Prior to this, 73 parties had filed proofs of claim totalling S$3.51 billion as a preliminary before the scheme meetings. This took place while the Indonesian investment firm Salim-Medco was still offering the rescue package deal.
During this time, some of the biggest claim amounts were filed by retail PnP investors. Medium-term noteholders were claiming S$277.7 million, holders of S$400 million (8 per cent preference shares) were claiming S$429.3 million, and holders of S$500 million (6 per cent perps) were claiming S$540.7 million.
Among other claiming creditors also include the Singaporean banking corporation, DBS Bank, Tahlyat Myah Magtaa SpA, Ascendas Reit, Singapore branch of Mizuho Bank, KfW Ipex-Bank, and ESR-Reit.
Earlier in January this year, Hyflux’s debt moratorium was granted extension by the High Court as WongPartnership discharged themselves as legal representatives to Hyflux legally, concerning the issue of “withdrawal for loss of confidence and other good cause”.