Regulators Refusing to Act - Hyflux & Noble Group's Decline

[JustLikeThis]

6% is easily 3 times more than the shitty less than 2% of fixed deposit these days.

Every financial instrument is priced at the interest-rate (market-rate) when it was issued.

 

[rushifa666]

8.5 doesnt beat gst and inflation, like i said if you put money here its an auro reduction over time

 

[JustLikeThis]

With Mahathir Next Door, Singapore’s Water Baby Needs a Lifeboat
Ensuring Hyflux’s desalination plant stays in safe hands is critical.
https://www.bloomberg.com/amp/view/...-door-singapore-s-water-baby-needs-a-lifeboat

 

[JustLikeThis]

Consumers paying more - largely due to a steeper rise in electricity and gas prices
https://www.straitstimes.com/busine...uly-core-inflation-at-4-year-high-amid-higher

Power Generators bleeding money
https://www.businesstimes.com.sg/en...ration-sector-crushed-by-massive-overcapacity

SP group profits from both sides - $900m to $1billion annually.
https://www.theonlinecitizen.com/20...by-2-8-average-from-1-apr-as-approved-by-ema/

 

[JustLikeThis]

Memory Lane - Lehman Crisis 10 years ago

When Lehman Crisis exploded, Treasury Secretary Hank Paulson reportedly kneeled before House Speaker Nancy Pelosi last night in a bid to keep her party on board with the bailout package—while the GOP chafes and grimaces—so it can get through Congress and onto the president's desk before the credit markets seize up.

Actually, the Wall Street Journal 's report said that it was really "a moment of levity in a rough day," rather than a display of humility.

Hank Paulson Kneeling Before Pelosi
https://money.usnews.com/money/blogs/the-inside-job/2008/09/26/hank-paulson-kneeling-before-pelosi

 

[borom]

When Hyflux issued her preference shares in 2011, OCBC was paying about 5.1% for their preference shares....Hyflux paid 6% for the 2011 preference shares ………..

Then when Hyflux paid 6% for her 2016 perpetual bonds,...Julius Baer just issued 5.75% perpetual SGD bonds...……..

I think the 5.1% OCBC Pref shares was issued in 2008 (not 2011) .
The closest comparison for 2016 will be Aspial Tr at 5.34% (albeit 4 yrs ) but so do Hyflux have a call option to redeem on 2020 or pay interest at 8%

The comparison with banks like Julius Baer is not really useful as banks use these for their Basel III minimum capital ratios requirement (The minimum Tier 1 capital is 6% of Risk-weighted asset.) Most of banks assets are funded by your deposits that are paying peanuts at the moment,

 

[JustLikeThis]

I think the 5.1% OCBC Pref shares was issued in 2008 (not 2011) .
The closest comparison for 2016 will be Aspial Tr at 5.34% (albeit 4 yrs ) but so do Hyflux have a call option to redeem on 2020 or pay interest at 8%

The comparison with banks like Julius Baer is not really useful as banks use these for their Basel III minimum capital ratios requirement (The minimum Tier 1 capital is 6% of Risk-weighted asset.) Most of banks assets are funded by your deposits that are paying peanuts at the moment,

Excellent insights.

 

[JustLikeThis]

MESSAGE TO NOBLE GROUP’S CURRENT AND PAST SECURITIES HOLDERS WHO ARE NOT SATISFIED WITH NOBLE’S PROPOSED RESTRUCTURING AND WANT TO JOIN LAWSUITS AGAINST THE PARTIES ASSOCIATED TO THIS FRAUD FOR A BETTER FINANCIAL RECOVERY
https://iceberg-research.com/2018/0...gainst-the-parties-associated-to-this-fraud-f

The “new Noble” as it is advertised in the restructuring proposed by Noble is a scam, exactly as the “old Noble” was a scam. It is another trick to foul investors. It will be the same company, with the same failed management. The same persons who have lied to investors for years are already lying on the viability of the new Noble. How many times did this management promise a turnaround? When was the last time Noble’s managers said the truth? In the US, Noble’s managers would have undoubtedly been charged with fraud by the SEC. As usual, Noble’s managers will pay themselves obscene salaries and bonuses. The ad hoc group will get rid of its exposure as soon as possible, leaving other investors with heavy losses.

There is only one way for Noble securities holders to recover their money: to sue the firms and persons who have organised this fraud. It is the right thing to do in terms of justice, but it is also the only viable strategy to get their money back. The restructuring proposed by Noble will direct any cash flow to management and the ad hoc group. We expect the other shareholders to lose everything.

Although Noble’s managers and the auditor E&Y are responsible for one of the largest frauds of the past twenty years, they have been allowed to operate in complete impunity. Noble’s securities holders (current and past) have the power to end this unprecedented scandal.

 

[JustLikeThis]

G8 Education's investors beware

Overweight Rating on the GEMAU 5.500% 18May2019 Corp (SGD) by Bondsupermart on 4th Sept 2018
https://www.bondsupermart.com/main/article/G8-Education-Half-Yearly-Results-2018-576

Australian Financial Review: Shorts pile into G8 Education as debt deals near
https://www.afr.com/street-talk/shorts-pile-into-g8-education-as-debt-deals-near-20180917-h15gmp
The bets against listed child care operator G8 Education are starting to stack up as attention turns to whether the company's two debt deals due to be closed in the coming month. G8 Education is in the market for $400 million in fresh debt to refinance its Singapore-listed bonds and a $200 million club bank facility, and another $100 million subordinated debt facility.

 

[rushifa666]

I do hope this mess drags on till election day

 

[JustLikeThis]

I do hope this mess drags on till election day

It is quite messy. We are almost going to see a total collapse of the Singapore retail bond market.

Oxley has been flagged by Bloomberg lately.
https://www.businesstimes.com.sg/re...builders-seen-facing-debt-troubles-amid-curbs

Aspial (related Fragrance & Money-Max) also over stretched their balance sheets.
They shares are also trading near historical lows due to fears of rights-issue to redeem the bonds when due.

 

[rushifa666]

Shipping there are several scandals too. Horrible. Its like theres no regulation at all

 

[JustLikeThis]

Hyflux requested 2 more days to prepare their updates on reoganization process despite given a 3-month duration - postpone till tomorrow.
http://investors.hyflux.com/newsroom/20180919_165135_600_C2JBQ24R5N0F01O0.1.pdf

It's either there are some much compelling offers that are outbidding each other, so they need 2 more days to finalize the updates. Or less-likely, there are some negative events that warranted more investigations or no progress.

 

[JustLikeThis]

Shipping there are several scandals too. Horrible. Its like theres no regulation at all

Big companies are usually spared the rod.

 

[JustLikeThis]

MESSAGE TO NOBLE GROUP’S CURRENT AND PAST SECURITIES HOLDERS WHO ARE NOT SATISFIED WITH NOBLE’S PROPOSED RESTRUCTURING AND WANT TO JOIN LAWSUITS AGAINST THE PARTIES ASSOCIATED TO THIS FRAUD FOR A BETTER FINANCIAL RECOVERY
https://iceberg-research.com/2018/0...gainst-the-parties-associated-to-this-fraud-f

The “new Noble” as it is advertised in the restructuring proposed by Noble is a scam, exactly as the “old Noble” was a scam. It is another trick to foul investors. It will be the same company, with the same failed management. The same persons who have lied to investors for years are already lying on the viability of the new Noble. How many times did this management promise a turnaround? When was the last time Noble’s managers said the truth? In the US, Noble’s managers would have undoubtedly been charged with fraud by the SEC. As usual, Noble’s managers will pay themselves obscene salaries and bonuses. The ad hoc group will get rid of its exposure as soon as possible, leaving other investors with heavy losses.

There is only one way for Noble securities holders to recover their money: to sue the firms and persons who have organised this fraud. It is the right thing to do in terms of justice, but it is also the only viable strategy to get their money back. The restructuring proposed by Noble will direct any cash flow to management and the ad hoc group. We expect the other shareholders to lose everything.

Although Noble’s managers and the auditor E&Y are responsible for one of the largest frauds of the past twenty years, they have been allowed to operate in complete impunity. Noble’s securities holders (current and past) have the power to end this unprecedented scandal.

Useless Regulators in Singapore refused to act - SGX is like a cowboy town.
Noble Group sued for Fraud
https://splash247.com/noble-group-sued-for-fraud

Perpetual Bondholders in troubled commodities firm Noble Group is hiring UK law firm Locke Lord to sue the company and certain senior management for fraud.

“We will go after all the companies and individuals that have organised or facilitated this fraud”, Iceberg Research stated in a release. Iceberg will act as advisor in the legal campaign saying that it has provided an analysis of Noble’s wrongdoings and accounting malpractice, likening the Singapore-listed company to busted American energy trader, Enron.

 

[Hypocrite-The]

MESSAGE TO NOBLE GROUP’S CURRENT AND PAST SECURITIES HOLDERS WHO ARE NOT SATISFIED WITH NOBLE’S PROPOSED RESTRUCTURING AND WANT TO JOIN LAWSUITS AGAINST THE PARTIES ASSOCIATED TO THIS FRAUD FOR A BETTER FINANCIAL RECOVERY
https://iceberg-research.com/2018/0...gainst-the-parties-associated-to-this-fraud-f

The “new Noble” as it is advertised in the restructuring proposed by Noble is a scam, exactly as the “old Noble” was a scam. It is another trick to foul investors. It will be the same company, with the same failed management. The same persons who have lied to investors for years are already lying on the viability of the new Noble. How many times did this management promise a turnaround? When was the last time Noble’s managers said the truth? In the US, Noble’s managers would have undoubtedly been charged with fraud by the SEC. As usual, Noble’s managers will pay themselves obscene salaries and bonuses. The ad hoc group will get rid of its exposure as soon as possible, leaving other investors with heavy losses.

There is only one way for Noble securities holders to recover their money: to sue the firms and persons who have organised this fraud. It is the right thing to do in terms of justice, but it is also the only viable strategy to get their money back. The restructuring proposed by Noble will direct any cash flow to management and the ad hoc group. We expect the other shareholders to lose everything.

Although Noble’s managers and the auditor E&Y are responsible for one of the largest frauds of the past twenty years, they have been allowed to operate in complete impunity. Noble’s securities holders (current and past) have the power to end this unprecedented scandal.

Actually this is a time for tan kin Lian to resurface. If he can help these investors. He can resurrect his political career n maybe become an MP. Or help him be the next president of singkieland since he is the only non pappie to qualify under the new rules.

 

[JustLikeThis]

PLEASE SHARE!!!
LET Hyflux Closes Shop NOW - If Hyflux continues operating without a new owner (like Mitsubishi, Temasek or CITIC) who can restore lender's confidence, bondholders, preference shareholders and perpetual bondholders have to lose a lot more.
http://binaryhints.com/hyflux-sale-of-tuaspring-and-the-financial-damages-part-2


Basically Hyflux has 4 vested parties. Should all of Hyflux’s assets be sold off (cease to be a going concern), below is the order in which these parties will have a share of the proceeds:

(i) Firstly, secured lenders (e.g. Banks such as Maybank)
(ii) Unsecured Bondholders (who collectively hold $265 million of Hyflux bonds)
(iii) Perpetual and Preference Shareholders (collectively having a $900 Million Stake)
(iv) Lastly Ordinary Shareholders (who have $100 Million in equity left in the balance sheet).

Hence should Hyflux take the $600-750 Million impairment and is able to sell off the rest of its assets and projects at their stated value. Hyflux Ordinary shareholders will get nothing, Perpetual and Preference shareholders are likely to lose close to 70% of their capital; while Bondholders and Secured lenders are likely to walk away unscathed.

What happens if Hyflux takes the Impairment and continues Operating with its other assets?

In my opinion, this scenario has a higher probability to occur. Hyflux will continue its oeprations after selling Tuaspring for a cash proceeds of about $700-850 Million.

However, Hyflux has to first pay off Maybank the $400 million loan it took. This leaves Hyflux with about $300 million – $450 Million cash. Hyflux currently has about $18.6 million in cash reserves in June 2018. With a $100 Million bond it has to pay this year and bank loans due this year, $165 million of bond due next year, it is difficult for Hyflux to repay all its bondholders and continue funding its projects which are burning cash as they are not under construction.

Should Hyflux be unable to sell off its other assets, i expect Hyflux to propose a financial restructuring where bondholders (ii) , and investors of group (iii) and (iv) will have to undertake a conversion to share exercise like what Ezion did.

Ezion Case Study

Ezion is a unique case because bondholders, perpetual shareholders all agreed to a conversion to share deal. However one key difference is that Ezion bond and perpetual holders knew that should Ezion cease as a going concern, they were likely to lose their entire capital. However, in Hyflux’s case, bondholders are probably aware they will get a significant amount of capital back if they demand the closing down of Hyflux and liquidation of its assets.

 

[JustLikeThis]

Is There Something Wrong with Singapore’s Accounting Practices?
http://binaryhints.com/is-there-something-wrong-with-singapores-accounting-practices/

Case 1- Noble Write Down

Many of us will be aware of Noble’s huge write down on its financial derivatives and the subsequent loss in shareholder value. All these while, an independent research house, Iceberg, has been indicating that Noble had over-valued its financial derivative assets. What made it worse was that Noble’s own external auditor, Ernest & Young, had for years been giving Noble the clean bill of health. While it is true the methodology is sound, the inputs/estimates Noble had given was unrealistic.

This begs the question: Are our auditors really looking at the authenticity of numbers by thinking on the inputs or are senior partners just blindly signing off? After all, many university students have learnt of the idiom – “Rubbish in, Rubbish Out”; hence I wonder if many of our practicing auditors do take heart of this idiom when doing their work. This brings me to the second case.

Case 2- Hyflux and Tuaspring.

This is another classic story of “Rubbish in, Rubbish Out”. Hyflux is now in financial limbo and at the heart of it is its largest asset- Tuaspring which is worth $1.4 billion in book value with a lifespan of 20 more years. How did Hyflux value $1.4 billion? Well Hyflux had based it by estimating the total economic value its power plant will bring based on 2011’s electricity price of $200+ per unit and extrapolated it until the duration end of 2038.

Fast forward to its completion in 2015, prices hit its low points and in 2016 it went down to below $70+. One may argue that electricity prices will rise back to $200+ to match Hyflux’s estimates, but common sense and Google searching would have showed that Singapore’s power industry was oversupplied where power output supply was double that of demand. Even if the upward reversion is true, it will take time. Hyflux definitely could have taken an impairment n for the poor outlook that is happening now.

Unsurprising Hyflux’s external auditor, KPMG, are still giving the OK for Hyflux’s stated book value until FY2017. With the recent need to sell Tuaspring to rescue itself, I am pretty sure Hyflux will be booking an impairment on its own and not because KPMG has realized the inputs to Hyflux’s valuation model does not hold true.

It makes me wonder if our auditors are indeed verifying the authenticity of the reported balance sheet numbers of our companies. In addition, with recent times, we have noticed how many companies with overseas operations have been found to report non-existent cash balances in their balance sheet. The most recent example was Midas Holding (External Auditor: Mazars)

It makes one wonder the robustness of our auditors in conducting their due diligence on overseas operations of listed companies here. In fact, if I am in to indulge in my clairvoyance ability, my crystal ball says a listed company starting with “S” is dodgy. The company’s market capitalization is much lower than its stated net asset value and will easily pass any CNAV analysis value investing model; surprisingly no hedge fund or investment fund is invested in it!

 

[JustLikeThis]

Hyflux investors didn't expect government policies to cause Hyflux's downfall

 

[JustLikeThis]

When Hyflux collapses, PUB can get to intervene and take over the assets for almost free. Even better right?