Hyflux update: white knight

Hyflux has now announced that a Malaysian company,  SM INVESTMENTS PTE. LTD, a company of the consortium comprising the Salim Group and the Medco Group, will provide an investment described as follows:

the Investor will invest a total of S$530 million by subscribing for ordinary shares in Hyflux which after the reorganisation, will constitute 60% of Hyflux’s ordinary shares, for S$400 million, and extending an unsecured shareholder’s loan of S$130m. The agreements also provide for the investor to extend rescue financing of S$30m (subject to court approval) pending the prior to the completion of the reorganisation and investment. This rescue financing will be set off against the investment when made.

And furthermore:

The investment is subject to several steps including obtaining regulatory, creditors’ and shareholders’ approvals for various aspects of the investment. One of the conditions to the investment being made is that the existing debts be restructured and reorganised through court proceedings (called a scheme of arrangement) that are part of the ongoing reorganisation process.

The bonds are now selling as follows according to Bond Supermart:

Issue Price YTM
HYFSP 4.600% 23Sep2019 25.1 407%
HYFSP 4.200% 29Aug2019 68.764 64%
HYFSP 8.0% Perpetual Pref 65.346 12.628%
HYFSP 6.0% Perpetual / Callable 2020 49.734 17.54%

An interesting saga continues! The fact that a white knight has come in does not seem too surprising, but the fact that the subordinated retail instruments are selling for less than the more senior unsecured notes seems very strange.

More to come.


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