And will Hyflux retail investors still vote for the PAP? (Reference: Will Oliver Lum and other Hyflux investors still vote for the PAP?)
So
HYFLUX has taken a S$916 million impairment for the nine months ended Sept 30, to adjust for a fall in carrying value of the Tuaspring water and power plant and other write-downs.
This figure was released … after Hyflux submitted its latest statement of financial position to the High Court.
“The impairment loss . . . relates predominantly to the impairment loss arising from the assessment of the carrying value of Tuaspring and the impairment of receivables for previously completed projects,” …
Hyflux had asked a valuer to conduct an up-to-date valuation of the Tuaspring plant, but no exact figure was shared in the submission.
BT report in early March
But
When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.
And when it did its 6% Perpetuals in 2016, the book value attributed Tuaspring was around this value.
So in the light of the loss in 2017, it’s reasonable to ask why the book value of Tuaspring was not looked at again before the auditors blessed the 2017 accounts in March 2018,
When KPMG issued an unqualified opinion on the full year results for the Hyflux Group in March 2018, there were no events or conditions that individually or collectively, cast significant doubt on the going concern assumption as at the balance sheet date of 31 December 2017, or at the audit report date of 22 March 2018.
Hyflux on investor losses: “Not our fault, banksters at work”;
if not earlier in 2017 when signs of trouble may have become apparent. Unless of course maybe Hyflux’s finance and accounting departments were staffed by Wankers or their relatives and friends? See: Wankers’ Party still blur on audits and accounting and What the US army and WP have in common?.
OK, OK, juz joking.
I’ll end with more extracts from BT report to give an idea of how big the hole caused by the drop in book value of Tuaspring and how the banksters are getting their money back while PAP voters are being screwed (anti-PAP voters got no money according to TRE cybernuts):.
At the end of September 2018, the value of Hyflux’s held-for-sale assets was S$651 million, or S$824 million lower.
Hyflux said: “This valuation is based on the most recent market study conducted by K4K Training & Advisory SL, the same consultant who did a similar market study in 2016 (which supported the valuation then). The view taken in this most recent market study is significantly different from that in 2016 due to . . . the losses in the electricity market in the recent years and the projected lower spark spreads for the remaining concession period.”
Noting that the current valuation is “significantly lower” than that adopted in 2016, Hyflux said that it intends to commission a further valuation to be undertaken by a different valuer for the purposes of finalising the 2018 full-year financial results.
“As the carrying value is a reflection of the current depressed market, in the event that the Singapore power market recovers to provide generation companies with sufficient spark spread margins, the valuation might then be revised,” Hyflux said.
Banksters take their money and run:
However, if creditors consent to haircuts under its proposed restructuring scheme, Hyflux will return to a net asset position of S$1.1 billion, according to the group’s pro forma calculations. Mr Gerald said: “This means that the company may have positive value post restructuring.”
Post-restructuring, Hyflux’s pro-forma net tangible assets (NTA) per share would be 4.2 Singapore cents, based on an NTA of S$815.3 million distributed across an enlarged share base after an equity injection and various debt-for-equity swaps.
Indonesia’s Salim Group and Medco Group had earlier agreed to give Hyflux a S$400 million equity injection in exchange for a 60 per cent stake in the company post-restructuring. Effectively, Salim-Medco is buying into Hyflux at 3.4 Singapore cents a share.
If the Salim-Medco deal goes through, Hyflux’s debt securities holders and senior unsecured lenders will be cleaned off the balance sheet.
PAP voters get shafted:
Retail perpetual and preference share holders will have their S$900 million in claims swapped for S$27 million in cash and S$69.2 million shares, assuming that the shares are valued at 3.4 cents apiece. That works out to a 10.7 per cent recovery rate on their principal.
And there’s the retail shareholders.
Will they still vote for the PAP? Double confirm, ground not sweet for PAP.
Vote wisely. But the problem is Mad Dog, Lim Tean and Meng Seng.
Sad.
Thoughts of a Cynical Investor 