SINGAPORE (June 2): Hyflux, which is struggling with its long-drawn restructuring process, now faces a joint probe by the Commercial Affairs Department (CAD), the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA), for suspected false and misleading statements as well as breaches of disclosure requirements.
The company’s former and current directors, including founder and executive chairman Olivia Lum, are subjects of investigations too.
“The investigation follows from a review into Hyflux-related disclosure, and compliance with accounting and auditing standards that was announced by ACRA, MAS and the Singapore Exchange Regulation on April 16 2019,” say the three bodies in a joint statement.
As a result of this review, there’s now suspicion that offences may have been committed, the joint statement says.
“The investigation will ascertain whether there were lapses in Hyflux’s disclosures concerning the Tuaspring Integrated Water and Power Project, as well as non-compliance with accounting standards between 2011 and 2018,” according to the statement.
As part of the investigation, CAD, MAS and ACRA have obtained accounting and other corporate records from Hyflux and its subsidiary Tuaspring.
Hyflux’s directors and key officers who were involved in the Tuaspring IWPP have also been interviewed.
According to the joint statement, while the review was launched last April, it was an “extensive exercise” covering statements and announcements over between 2011 and 2018.
The current investigation was launched as soon as the review was completed, as the review disclosed reason to suspect that offences had been committed.
The on-going reorganisation process, according to the joint statement, is deemed separate from the criminal investigations.
“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,” according to the statement.
On May 27, potential investor Utico changed the terms of its offers. It now wants all of Hyflux’s creditors to take Utico and Hyflux shares, instead of having a portion in cash.
In response, Hyflux said that the deal with Utico has lapsed and is exploring options with other potential investors including Aqua Munda, Longview and FCC Aqualia.
In a separate announcement on June 2, Hyflux released a letter from Aqua Munda, which stated its intention to extend a $10 million cash line to keep Hyflux operational, as negotiations to acquire Hyflux’s debt goes ahead.
“Aqua Munda is committed to helping the Hyflux Group to complete its debt restructuring and be reinstated as a going-concern as soon as practicable,” says Aqua Munda director Bambang Sugeng bin Kajairi in the letter.
Hyflux, a former high-flying water treatment company, floundered under a debt load of some $2.95 billion that it couldn’t service.
Besides Maybank, and more than a dozen other banks, Hyflux’s creditors include some 50,000 retail investors in its perpetual securities.