SINGAPORE (Feb 27): Singapore’s troubled water treatment company Hyflux, formerly celebrated as a hallmark of entrepreneurship in better times, is set for a humbling week.

Creditors are due to file proof by Friday of the obligations that Hyflux owes them, putting the company’s $2.7 billion unsecured debt load under an even brighter spotlight. The firm this month unveiled a proposal to impose 75 to 90% haircuts on unsecured creditors, following a tumble triggered by an ill-timed expansion into energy in recent years.

Singapore’s debt market has inflicted deep losses on unsecured creditors since the oil-market slump in late 2013, as a myriad of companies followed shipbuilders and charterers into distress. Some Hyflux investors have banked on government help, given that the company owns the Tuaspring desalination plant deemed crucial to Singapore’s water supply. But those bets may be misplaced, some observers argue.

“From some of our conversations, many have invested in Hyflux based on the premise of government backing,” said Ang Chung Yuh, a fixed-income analyst at iFast Corp. in Singapore. “It’s a misconception.” While the asset is critical, the holding company isn’t, he added.

Hyflux hasn’t published its accounts since reporting a $22.2 million loss in the first quarter of 2018. It has agreed to release its 2018 full-year financial statements by March 1 to enable creditors to evaluate its debt proposal, according to a court filing.

See: Hyflux CEO to contribute entire stake to restructuring plan; ordinary shareholders to get 2.74% of total shares

See also: Hyflux's perpetual security holders get back only 10% of investment in restructure