Troubled water treatment firm Hyflux is under criminal investigation for false and misleading statements, as well as non-compliance with accounting standards, the authorities said on Tuesday (June 2).
The investigation, which also involves the company’s existing and former directors, follows a review of Hyflux-related disclosures and compliance with accounting and auditing standards which was announced in April last year. The review, conducted by financial regulators Monetary Authority of Singapore (MAS), the Accounting and Corporate Regulatory Authority (Acra) and the Singapore Exchange Regulation, uncovered reasons to suspect that several offences may have been committed.
The joint investigation undertaken by Acra, MAS and the police’s Commercial Affairs Department (CAD) will ascertain if 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.
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Hyflux and directors under criminal investigation for suspected false and misleading statements
Authorities have launched a joint investigation into Hyflux and its current and former directors for suspected false statements and disclosure requirement breaches, as well as potential non-compliance with accounting standards.
In a joint statement on Tuesday (Jun 2), the police's Commercial Affairs Department (CAD), the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA) said the investigation follows a more than year-long review of Hyflux-related disclosure, and compliance with accounting and auditing standards.
ACRA, MAS and the Singapore Exchange Regulation started a review in April last year to see if Hyflux had breached any regulations. The review disclosed reasons to suspect that offences may have been committed.
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From making waves to drowning in red ink
As they arrived, the guests would have been in no doubt they were attending a high-profile event. Huge balloons and congratulatory flowers festooned the area. Drummers and a Chinese orchestra revved up the celebratory atmosphere. Photographers clicked away as guests streamed in and warm handshakes were exchanged.
At the centre of it all was Olivia Lum, the founder of home-grown star company Hyflux.
Dressed in a black and white pant suit, the businesswoman, whose name was synonymous with the water treatment giant she built, had a broad smile when the day’s special guest, Singapore’s Prime Minister Lee Hsien Loong, arrived.
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Rags-to-Riches Tale Turns Sour for One of Singapore's Best-Known Entrepreneurs
Olivia Lum is running out of time to save the company she spent a lifetime building.
The founder of Singapore-based water and power company Hyflux Ltd., which could see its court protection from creditors expire at the end of the month, has had a torrid two weeks.
A white-knight takeover that might have kept the company together has collapsed, hundreds of angry creditors protested in public, and the government appears set to step in and take over part of the company’s biggest asset for nothing.
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'A big shock’: Retail investors in Singapore caught out by Hyflux woes
Seen as one of Singapore’s most successful business stories, water treatment specialist Hyflux’s recent woes had come as a shock for many and for Mrs Goh, it was something that she had not seen coming.
Lured by an attractive 6 per cent coupon, she had put in S$10,000 into the company’s preference shares issued in 2011 at S$100 apiece.
While there was news about Hyflux’s weakened financial position over the years, semi-annual distribution payments have remained prompt, said the retail investor in her 60s who preferred not to reveal her full name. “I didn’t expect it to be that bad and they would need to do debt restructuring,” she told Channel NewsAsia. “The announcement was a big shock.”
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Investors Set to Lose Up to 90% on Singapore Water Debacle
The catastrophic slump of Singapore’s much-vaunted water and power company, Hyflux Ltd., has stunned 34,000 retail investors who were lured by the promise of a 6 percent annual return forever from a company that seemed to have a gold seal of government approval.
At the heart of the debacle is Tuaspring, a desalination and power plant that cost S$1.1 billion ($809 million) and was heralded as one of the “national taps” for an island that had long depended on importing water and harvesting rainwater for survival. The company’s glowing prospects encouraged investors including Li Meicheng and Violet Seow to funnel some of their savings into S$900 million of junior debt to help fund the venture and group expansion.
Tuaspring was opened to great fanfare in September 2013, with the head of the Public Utilities Board and two government ministers flanking Prime Minister Lee Hsien Loong, who called the plant “the latest milestone in Singapore’s water journey,” praising its “unique and cost-efficient design.”
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The fall of once-great Hyflux, a unicorn in the Singapore story
I have been following with great interest the events surrounding Hyflux over the last few months. For many years, the company and its founder, Olivia Lum, were held up as examples of a successful home-grown company and an outstanding entrepreneur respectively.
That the company was in the water sector, a critical resource for Singapore and increasingly the rest of the world, was an added plus, when it implied the company was serving the nation and “doing good” while doing well. But somewhere in between its astronomical rise and the situation today, the wheels came off the wagon.
There is a good possibility that many bondholders will lose most of their investments in Hyflux and the company will exist in a reduced form – that is if it manages to survive and secure the necessary support from financial backers and key stakeholders for the proposed restructuring.
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Hyflux after the perfect storm
Over the past few months, investors in Hyflux have been anxiously observing the unfolding of events.
When white knights in the form of a consortium comprising Salim Group and Medco Group (SM Investments) entered into an agreement in October last year to invest S$400 million for 60 per cent of Hyflux’s equity and to grant S$130 million in loan, things started looking up.
Then in March, national water agency, PUB, issued a default notice giving Hyflux some time to remedy defaults arising from a water agreement, failing which PUB will take over its subsidiary, Tuaspring, “as whole, or the desalination plant alone”.
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PUB takes over Tuaspring desalination plant from Hyflux
As of today, national water agency PUB has taken over the Tuaspring desalination plant from troubled water treatment firm Hyflux.
The transfer came after the water purchase agreement with Tuaspring was terminated yesterday.
PUB confirmed the move in a statement at midnight, adding that the move was to safeguard Singapore's water security.
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SIAS raises questions about Hyflux CEO’s remuneration amid financial troubles
File photo of founder and CEO of Hyflux Group Olivia Lum
Despite reporting losses of S$115.6 million in 2017, troubled water treatment firm Hyflux spent about S$2.7 million on remuneration for its key executives, with CEO Olivia Lum receiving between S$750,000 and S$1 million in salary, benefits and bonuses.
In addition to this "large remuneration", Ms Lum also received more than S$60 million in dividends "in the time that shareholders and bond holders have seen their entire investment destroyed", according to the Securities Investors’ Association (Singapore) (SIAS).
Highlighting these points, SIAS asked why the Hyflux founder - which has 34 per cent ordinary shareholding in the company - did not contribute her gains to the restructuring process. The investor watchdog also asked if Ms Lum would have any role in the Hyflux group after the firm’s restructuring.
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I am deeply saddened for the pain and loss suffered by investors, lenders: Hyflux CEO
Hyflux executive chairman and CEO Olivia Lum said on Friday (Feb 15) that she is "deeply saddened for the pain and loss suffered" by investors and lenders.
Despite the company's continued efforts, it was unable to "succeed in the manner we had intended', Ms Lum said, on behalf of Hyflux's board of directors.
The remarks were made in an 18-page reply to Securities Investors’ Association (Singapore) (SIAS), which on Monday had raised more than 40 questions about, among others, the "large remuneration" enjoyed by Ms Lum amid the company's financial troubles.
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Hyflux CEO Olivia Lum vows to get $1 annual salary until firm ends restructuring
Hyflux is forced to make more cost-cutting measures after the SM Investments deal fell apart
After a whirlwind of conflicts with investors and creditors and calls for resignation, the head of the embattled water treatment firm Hyflux, Olivia Lum, has declared that she will only draw a nominal annual salary of $1 until the company is successfully restructured.
Lum also said in a court affidavit dated 23 April 2019 that the Hyflux board has agreed that no director fees will be proposed at the next annual general meeting for FY2018.
Hyflux was forced to impose more cost-cutting measures after its previous deal fell apart with would-be white knight SM Investments, thereby breaking the restructuring agreement on 4 April.
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Hyflux in hot water: 6 things about embattled CEO Olivia Lum
Once upon a time, it seemed she rode a perpetually cresting wave from one success to the next.
But now, Hyflux chief executive Olivia Lum can only watch as the water treatment firm she founded 30 years ago struggles not to drown.
On Saturday (Feb 16), Ms Lum volunteered her entire stake of 267 million shares and securities - about 34 per cent of Hyflux's ordinary shares - as part of a proposed restructuring plan for the beleaguered company, which is now insolvent.
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CEO Olivia Lum did not get S$60m in dividends in 2017, says Hyflux
Beleaguered water treatment plant Hyflux has responded to a series of questions from Singapore’s investor watchdog, refuting claims that its founder Olivia Lum received more than S$60 million in dividends in the year her company’s shareholders and bondholders saw their entire investments destroyed.
On Monday (Feb 11), the Securities Investors Association Singapore (SIAS) had posed more than 40 questions in a letter to Hyflux.
Once seen as the darling of Singapore’s entrepreneurial scene, the firm is now undergoing a court-supervised reorganisation after chalking up a debt of S$2.95 billion as of March 31, 2018.
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FORBES #39 Olivia Lum
Her water-treatment firm, Hyflux, is facing rough weather with time and cost overruns at its Tuas plant, lower margins and a slowdown in orders. One bright spot: deal to build Asia's largest desalination plant in India at a cost of $600 million, jointly with Japan's Itochu Corp. and Hitachi.
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Olivia Lum
Lum was adopted at birth, and never knew her biological parents; she was brought up by a woman she called her "grandmother". When Lum was only three, her grandmother gambled away her savings; they lost the house in which they were living, and moved to a shack without running water. She came to Singapore at the age of 15 and enrolled at the Tiong Bahru Secondary School, where she supported herself through tutoring and sales jobs. She went on to study at Hwa Chong Junior College and graduated in 1986 with an Honours degree in chemistry from the Faculty of Science of the National University of Singapore.
Career:
- Lum started corporate life as a chemist with Glaxo Pharmaceutical. After working for three years at Glaxo, she left in 1989 at the age of 28 to start up Hydrochem, the precursor to Hyflux, with just SG$20,000 of capital, which she raised by selling her condominium and car.[3] She hired three employees at the start; Lum herself rode around on a motorcycle selling her company's water filters and treatment chemicals.[4] By January 2001, Hyflux had become the first water treatment company to be listed on SESDAQ, and was upgraded to the Singapore Exchange's Mainboard in April 2003.[citation needed] By 2005, she had a net worth of over US$240 million, which earned her a place as the only woman on Forbes' "Southeast Asia Rich List". As of 2007, Hyflux was worth SG$1 billion and employed more than 800 people.
- Lum holds several positions in public service. She is a board member of SPRING Singapore, the National University Singapore Council, and the Singapore Exchange, as well as the president of the Singapore Water Association. She is also a member of the UNESCAP Business Advisory Council and the Singapore Green Plan 2012 coordinating committee. Lum was a Nominated Member of Parliament in the Parliament of Singapore from 2 July 2002 to 1 January 2005. In 2003, she was awarded the International Management Action Award, followed by the Global Female Invent and Innovate Award the following year.
- On October 3, 2008, Lum resigned her position as independent non-executive director of the Singapore Exchange and relinquished her position on the audit, regulatory conflicts and remuneration committees of the Exchange, according to the Exchange's filing. She stated this was due to her heavy work commitments in line with Hyflux's rapid expansion, and that her resignation would enable her to focus more time and resources on Hyflux's growth.
- In 2013, Lum was appointed to the board at International Enterprise Singapore (IE Singapore).
- In 2014 she was appointed the board of Singapore Technologies Engineering (ST Engineering). In 2018, Lum resigned from this position citing business commitments as her reason for resignation.
- In May 2018, Hyflux applied to the Singapore High Court for a 30-day protection against creditor claims to allow the company time to reorganize its liabilities. Following this voluntary filing, Lum announced a series of three townhall meetings with the company's 50,000 plus retail shareholders. In July, Lum announced that efforts would be made to “ensure that the company stays viable.” Lum also noted that Hyflux had total debt of $1.17 billion
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Protestor at Hong Lim: We invested in Hyflux because “Temasek had invested”
Yesterday (30 Mar), at least 500 people went to Hong Lim Park to protest against Hyflux. Many are looking at losing 80-97% of their life savings and retirement funds which they have invested in Hyflux preference shares and perpetual securities (i.e, high-risk bonds).
In the case of Hyflux, under the current deal, investors can only get back 10.7 per cent of their original investments at around 3 per cent in cash and 7 per cent in equity. And by no means the value of the equity will rise in future.
Mr Tan Kin Lian, former NTUC Income CEO and former Presidential candidate in 2011, spoke at Hong Lim Park with regard to the Hyflux issue at length as no one else had dared to be a speaker for the event, according to Mr Tan.
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Rare Singapore Protest Flags Investor Anger in Hyflux Slump
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 percent. About 400 to 500 of those individual investors attended the protest in a downtown park on Saturday, some carrying placards and posters. Singapore allowed the protest at the Speakers’ Corner area in Hong Lim Park.
“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?”
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Hyflux investors call for protection in rare Singapore protest
Retail investors of Singapore's Hyflux who stand to lose most of the money they poured into the water treatment company gathered Saturday for a rally in the city-state, urging the government to protect them.
The 3 p.m. rally at a park in central Singapore attracted over 200 people, most of them senior citizens who invested their savings in Hyflux shares and bonds. The rally was organized by one of the investors, and word of the event spread through local news and social media during the week.
Under a debt restructuring plan proposed by Hyflux in February, about 34,000 retail investors would lose nearly 90% of their funds.
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Hyflux retail investors hold protest at Hong Lim Park over proposed debt restructuring plans
Hyflux’s retail investors are making their unhappiness heard. On March 30, a planned protest against Hyflux’s restructuring plans took place at Hong Lim Park from 3pm to 4pm, consisting of the embattled firm’s retail investors, Channel NewsAsia reports.
Reports of the number of protestors who turned up have varied, ranging from over 100 to 500.
The Straits Times (ST) reported that over 100 retail investors turned up for the protest, while CNA reported the number of protestors as around 300. Nikkei Asian Review noted that the rally drew over 200 people, while Bloomberg places the number between 400 to 500.
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HEADLINES Lim Tean to Help Hyflux Investors Seek Legal Redress
Hyflux investors, many of them “unsophisticated” retail investors such as retirees and housewives, stand to lose over 90 percent of their investment in Hyflux perpetual securities. Some are known to have invested their retirement savings in to these securities.
In March, a group of investors demonstrated at Speaker’s Corner to show their anger at the government’s bid to acquire Hyflux’s Tuaspring desalination plant at zero dollars.
Protestors also demanded fairer distribution of the company’s funds to affected investors should the company be liquidated.
related: Hundreds Protest Against Hyflux Restructuring Deal & PUB’s Tuaspring Takeover
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Hyflux working hard to stay ‘viable’, ensure fair treatment to shareholders: CEO Olivia Lum
With Hyflux granted a six-month moratorium that will last until mid-December, founder-CEO Olivia Lum said on Thursday (Jul 19) the management is working hard to keep the company afloat to ensure fair treatment for all stakeholders, including retail investors.
In her first media appearance since the home-grown water treatment specialist filed for court protection in May, Ms Lum, who is also the executive chairman of Hyflux, said: “Within this year, my hope and my goal is to always look after the shareholders and other stakeholders (so that) we can be fair to everybody.”
Referring to the more than 50,000 holders of the company’s perpetual securities, preference shares and common equities – in which many of them are mom-and-pop investors – she said: “They put their trust in me, in the company, to be able to bring returns to them and now we got into this trouble.
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Tang See Kit @SeeKitCNA
Meanwhile, there are others who want more answers from PUB about its $0 purchase price for Tuaspring. These investors have written a letter with some 10 questions and SIAS is understood to have forwarded the letter to PUB on Mon. A screenshot of the letter sent to CNA:
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Official Opening of Tuaspring Desalination Plant
PUB, the national water agency of Singapore, and Hyflux celebrated the official opening of Singapore’s second and largest seawater reverse osmosis desalination plant, Tuaspring Desalination Plant on 18 September 2013.
Tuaspring Desalination Plant marks another major step in Singapore’s journey towards water sustainability with the addition of another 318,500 m3 or 70 million gallons of desalinated water per day to Singapore’s water supply under a 25-year design-build-own-operate arrangement with PUB. This triples the amount of water Singapore gets from desalination.
Singapore’s Prime Minister Lee Hsien Loong, who officiated the opening of the desalination plant, noted in his speech that “Hyflux won an international competition to design and build this plant. It reflects Hyflux’s capabilities in this rapidly growing industry because theirs was the most unique and cost efficient design.”
related: Tuaspring Integrated Water and Power Plant
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Speech by Prime Minister Lee Hsien Loong at the official opening of Tuaspring Desalination Plant
Distinguished guests, ladies and gentlemen, I am very happy to be here to open the Tuaspring Desalination Plant today. This is Asia’s largest seawater reverse-osmosis desalination plant and our second desalination plant after Singspring. It will triple the size of our fourth “National Tap”, which is desalination for providing potable water in Singapore together with our other three “Taps” - our local water catchments, our imported water from Johor, and NEWater.
Hyflux won an international competition to design and build this plant. It reflects Hyflux’s capabilities in this rapidly growing industry because theirs was the most unique and cost-efficient design. They generate electricity on-site and have reduced the cost of producing desalinated water. And it also was able to build the plant on budget and in record time. So I congratulate Ms Olivia Lum and her team! Well done!
Tuaspring is the latest milestone in Singapore’s water journey. We have come a long way since we became an independent nation in 1965. Then, we were almost totally dependent on our imported water from Johor. In Singapore, Singaporeans lined up at public taps for water, we had night-soil collectors because our homes lacked sanitation. Today, we are able to supply a large part of our water needs ourselves. We have resilience in our system - even if there is a drought, we are prepared. Singaporeans enjoy a clean and reliable supply of water, and modern sanitation everywhere. What was once our strategic weakness has become a source of thought leadership and competitive advantage. But we should not take this for granted because around the world, three quarters of a billion people lack access to clean drinking water. And every year, three and a half million people die of water-borne diseases – in fact the size of Singapore’s citizen population. And yet Singapore is in a privileged, comfortable, secure position.
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related:
Once a star company, Singapore’s Hyflux faces major challenges
The ‘noose around the neck’ that needs to be sold, but can it be done?
Hyflux sought court protection to restructure mounting debt pile of nearly S$3billion
Hyflux says it remains committed to ‘fair’ restructuring plan as worries among retail
Hyflux applied to the High Court to begin a reorganisation of its debt & businesses
Hyflux has ‘credible’ revival plan, to file for moratorium extension on Thursday
Hyflux investors told to wait for detailed restructuring plan
Hyflux’s UAE investor plans to meet retail investors, asks PUB to delay Takeover
Hyflux under a court-supervised process to reorganise its liabilities and business
Hyflux application of a six-month moratorium
Hyflux's first annual loss since listing in 2001
Hyflux 3rd potential investor, with letter of interest to acquire overseas assets
Hyflux’s UAE investor plans to meet retail investors, asks PUB to delay Takeover
‘Independent’ investor-only meeting planned by SIAS for Hyflux’s retail investors
Hyflux extends deadline for stakeholders to file proofs of claims
Fallen Singapore High-Flyer Starts Debt Restructure Process
