SINGAPORE – The Securities Investors Association (Singapore), or Sias, is calling for the directors of embattled water treatment firm Hyflux to step down.

“Directors must go because of poor credibility and they may not have the time for restructuring. They have taken too long and haven’t displayed the ability to close a deal,” said Sias president David Gerald on Wednesday (June 3).

A number of perpetual securities and preference (PNP) shareholders have expressed their concerns about the current situation at Hyflux, he noted.

The company and its current and former directors are currently under criminal investigation by the police’s Commercial Affairs Department, the Accounting and Corporate Regulatory Authority (Acra), and the Monetary Authority of Singapore (MAS) over corporate governance lapses, which includes non-compliance with accounting standards.

The authorities’ probe follows the completion of a review conducted by financial regulators Acra, MAS and the Singapore Exchange Regulation.

“Where directors are under investigation of serious offences, they must ask themselves whether they should step aside and allow new directors, especially independent directors with expertise and fresh (minds), to deal with new offers,” said Mr Gerald, highlighting that Hyflux’s directors’ credibility is now in question.

Directors involved in the probe include Hyflux’s executive chairman Olivia Lum and lead independent director Teo Kiang Kok.

Hyflux has about 50,000 shareholders, bondholders, perpetual securities holders and preference shareholders, and its liabilities stood at $2.95 billion as of March 31, 2018. The company filed for bankruptcy protection and suspended share trading in May 2018.

Around 34,000 retail PNP shareholders are owed about $900 million in total.

Mr Gerald highlighted that in the two years since Hyflux filed for bankruptcy protection, it has not succeeded in restructuring the company, with rescue offers from white knights having fallen through.

Middle Eastern utility firm Utico’s $400 million rescue deal “ceased” following the lapsing of the agreement’s long-stop date, Hyflux said on May 29. But several other potential rescuers, such as Singapore-based Aqua Munda, remain interested and in discussions with Hyflux.

Sias is disappointed that the company’s board has on numerous occasions failed to respond to questions that the association raised on behalf of retail investors, Mr Gerald added.

It previously called on Hyflux to update its stakeholders on developments regarding Utico or other potential white knights, rather than leave them “in a state of uncertainty”, and for the company to organise a town hall for investors to better understand and respond to their concerns and queries.

Mr Gerald added that the association has been approached by investors who have asked if it would help initiate legal action against Hyflux’s directors.

He said Sias has advised investors interested in legal action to seek their own legal counsel or wait for the right time that would warrant such an action, as such an initiative now would affect any restructuring plan.