SINGAPORE (Dec 30): Securities Investors Association (Singapore) SIAS is urging Aqua Munda, which is trying to buy over Hyflux's debt, to be more transparent in its offer bid, referring in particular to its invitation memorandum on Friday.

“Based on the terms of the invitation memorandum, noteholders are to be aware that the invitation is solely between Aqua Munda and the senior unsecured creditors and does not involve Hyflux,” says SIAS CEO David Gerald in a press statement on Monday. 

“Accordingly, SIAS is advised that Hyflux has no obligation to conduct any due diligence on Aqua Munda and is purely facilitating the dissemination of information from Aqua Munda to Hyflux’s creditors,” he adds. 

In particular, Gerald has called on Aqua Munda to “in the interest of transparency”, disclose its funding and its related entities, as well as its intention with respect to the restructuring process as soon as possible. 

“At the moment, most of the queries raised by creditors relate to the identity of Aqua Munda and its director and sole shareholder, and whether Aqua Munda has the necessary funds to complete their proposed reverse Dutch auction,” notes Gerald. 

On Friday, Aqua Munda had released a memorandum inviting Hyflux noteholders and unsecured creditors to offer their debts for purchase at a minimum discount of 85%. 

The invitation is open to holders of Hyflux's 4.25% notes due 2018, as well as its 4.6% and 4.2% notes due 2019.

“All offers, once tendered, may not be amended or revoked at any time prior to or on the acceptance deadline,” said the company in its memorandum. 

Aqua Munda added that it has the sole and absolute discretion to decide which bids to accept, and may “re-open, terminate and/or extend the expiration deadline of the invitation.”

However, the company highlighted that the bid with the highest offered discount will be accepted first, followed by the one with the next highest offered discount and so on, until all the available settlement funds are utilised. 

Although Aqua Munda said that it would confirm the total available funds no later than Jan 18, the company has estimated that the debts will total to some $1.8 billion, including contingent liabilities of $750 million. 

This translates into about 60% of Hyflux’s total debt of $2.8 billion as at end-March.

And while this could bring hopeful prospects for long-suffering investors, Gerald has flagged some “settlement conditions” for investors to take note of. 

Firstly, SIAS identifies how the offer is not open to holders of Hyflux Perpetual Securities and Preference Shares (P&Ps), adding that some P&Ps have expressed interest to participate in a similar exercise. 

“Aqua Munda has announced that they would engage SIAS after the close of the current invitation,” says Gerald. “Aqua Munda has indicated their commitment to a debt restructuring exercise that is fair and equitable for all stakeholders.”

Gerald adds that SIAS will update all P&Ps on any discussion or proposal received from Aqua Munda. 

SIAS has also asked noteholders to ensure that they have read and understood the full terms and conditions of the memorandum, and have all the necessary information from Aqua Munda before making an offer, as they will be unable to withdraw their offer once tendered. 

“All accepted bids must vote in accordance with the instructions of Aqua Munda with respect to commencement, continuation, instruction, direction or authorization of any legal actions; support or reject any scheme application or extension; approve or reject any application for interim judicial management,” says Gerald. 

“SIAS also understands that Aqua Munda may withdraw the invitation if the required level of support from creditors and noteholders are not attained,” he adds.