SINGAPORE (Oct 29): Hyflux’s noteholders, preference shareholders and holders of perpetual securities have to be prepared for a substantial haircut while equity shareholders need to be prepared for significant dilution when the water company’s restructuring plans are announced.

On Oct 18, SM Investments Corp, a consortium formed between Salim Group and Medco Energi Internasional, announced it would inject $400 million into Hyflux for the subscription of new shares representing 60% of its enlarged issued share capital. That would take Hyflux’s issued share capital to $666.67 million compared with just $128 million as at March 31. SM Investments is likely to be the company’s largest shareholder, given that founder and executive chairperson Olivia Lum’s stake will be diluted.

Hyflux last announced its financial statement for 1QFY2018, stating that its net debt stood at $1.3 billion, with a gearing ratio of 1.3 times. The net debt figure does not include the preference shares and perpetual securities, which are viewed as quasi equity, which ranks above ordinary equity and is part of the company’s capital structure. Together, these were valued at $887 million as at March 31 (see Table 1).

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