Hyflux funded a flagship plant with retail debt repayable only if power prices held

Hyflux was Singapore's home-grown water-treatment champion. Founded by former journalist Olivia Lum in 1989 with S$20,000 of saved salary, it built the desalination and membrane technology that helped a water-scarce city-state become self-sufficient, and was listed on the SGX-ST in 2003 as one of its most-watched success stories.

Tuaspring, its second seawater desalination plant, was pitched as the company's flagship: an integrated water-and-power facility whose profitability depended on selling electricity from its co-located power plant into Singapore's merchant market. Construction finished in 2013, but electricity sales did not begin until February 2016 — and by then a glut of generation capacity had pushed pool prices to levels Hyflux's own 2016 annual report warned would 'continue impacting' the plant.

To finance this and other expansion, Hyflux sold perpetual preference shares and perpetual securities — instruments with no fixed redemption date — directly to the public. In May 2016, the very month the plant began losing money, it upsized a perpetual securities issue from S$300M to S$500M on 'red-hot' retail demand. About 34,000 retail investors were owed S$900M when the company fell.

In February 2018 Hyflux posted its first full-year loss since listing, with Tuaspring alone S$81.9M in the red. In May 2018 it halted trading and applied to the Singapore High Court for court-supervised debt restructuring. The state water agency PUB took Tuaspring back at no cost in 2019. After three years of failed rescues, the High Court placed Hyflux under judicial management in November 2020 and ordered it wound up in July 2021 — the end of a company once held up as a national model.