SINGAPORE (April 1): A rare public protest in Singapore on Saturday underscored mounting anger among investors set to suffer sharp losses in one of the country’s highest-profile corporate debt restructurings.

The catastrophic slump of the once-vaunted water and power company, Hyflux Ltd., has stunned debtholders, who stand to lose about 90%. About 400 to 500 of those individual investors gathered in a downtown park known as the Speaker’s Corner on Saturday, carrying placards and posters.

“There are a lot of questions that need answers,” said Ray Ho, a 65-year-old retiree who has invested in the company’s perpetual bonds. Investments were “a leap of faith. These are people’s life savings. How can you expect retail investors that are not-so-sophisticated to make the distinctions?”

Wendy Yap, 48, said she put in about $70,000 in Hyflux shares in 2014 and left her investments untouched for at least three years in the belief that utility companies were cash cows.

“It’s already a gone case,” she said, adding that her husband had also made a separate investment in the company. “But is there a lack of care here? We need to know the answer.”

At the heart of the debacle is Tuaspring, Hyflux’s desalination and power plant that was heralded as one of the “national taps” for an island that had long depended on importing water and harvesting rainwater for survival. Tuaspring was opened to great fanfare in September 2013, but losses snowballed after its gas-turbine power plant started selling excess capacity in 2016 to the power grid, which had a glut of electricity caused by liberalization of the market.

Calls for Probe

Some of the protesters’ placards called for authorities such as the Monetary Authority of Singapore to start an investigation and Hyflux’s auditor KPMG LLP to speak up on the issue.

Hyflux’s stumble has spotlighted the plight of about 34,000 retail investors who were lured by the promise of a 6% annual return forever from a company that seemed to have a gold seal of government approval.

Investors who bought into $900 million of Hyflux’s perpetual securities have been angered by the steep haircut that would be imposed by the company under its $2.8 billion restructuring plan. As junior creditors, they stand to lose about 90% while senior creditors are staring at a 75% loss.

Hyflux’s rescue plan will be put to vote by creditors on April 5.

“Hyflux understands the frustration and regrets the dissatisfaction that has caused some stakeholders to protest," the company said in reply to a request for comment. “We hope that notwithstanding their disappointment in Hyflux, they will vote on the basis of what is commercially and legally realizable in terms of recovery. Unlike in a liquidation, the scheme permits junior ranking creditors to receive payment even when the senior creditors are not fully paid."

Deadlines for Hyflux are looming and a dispute with the company’s suitor has deepened.

SM Investments, the closely held consortium of Indonesian businessmen that agreed last year to take a majority stake in the firm, said that it didn’t approve of the allocation of cash for working capital and repayment to creditors proposed by Hyflux under its court-supervised plan.

Reviewing Investment

It also alleged Hyflux was late in disclosing problems in the business, and that the group has been reviewing the allocation of working-capital needs of Hyflux following recent revelation of material information.

Hyflux refuted SM Investments’ comments in a stock exchange filing on Saturday, saying it didn’t withhold material information.

"Information had been provided promptly as and when requested by the investor," 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."

The Public Utilities Board served a notice of default on Tuaspring on March 5, citing operational and financial lapses, while it agreed to give more time for the integrated water and power plant to remedy defaults in a statement Friday. It’s willing to take over Hyflux’s Tuaspring desalination plant for $0, waiving a compensation fee due to defaults.

See also: PUB agrees to extend default cure period for Tuaspring to Apr 30

SM Investments has said it may abandon its rescue plan if the defaults aren’t remedied by April 1.

Meanwhile, Hyflux disclosed losses for the second and third quarters of last fiscal year in a filing to the exchange late Friday. Net losses were $119 million in the second quarter and about $978 million in the following quarter. The filings come after the company reported a loss of $1.1 billion for the nine months ended September, mainly due to a writedown on Tuaspring.